Proof of Work Miners Seek Haven in Ethereum Classic as Main Network Goes PoS
It only took minutes for Proof of Work miners to flock to Ethereum Classic after The Merge activated at 6:43 UTC on Thursday morning.
With Ethereum no longer reliant on mining as it changed to the Proof of Stake consensus mechanism, the hash rate of the Ethereum Classic network is at a record 106 terahashes per second (TH/s).
This came after surging 75% in the past 24 hours and more than 400% in two months, according to 2miners. The ETC coin is also up 180% over the same period, according to CoinGecko.
Ethereum Classic is expected to be one of the few beneficiaries of The Merge among Proof of Work chains, with only a limited number of chains able to onboard miners running EtHash ASIC hardware.
Ravencoin is another chain onboarding miners after The Merge. The network enjoying a 290% spike in hashing power since the start of September, with its hash rate currently at its highest level since May 2020. Its RVN token is also up 140% in two weeks.
Ergo’s hash rate is similarly surging, with its hashing power up 731% since Aug. 2 at a record high of 74.8 TH/s. The ERG token is up 183% over the same period.
Despite the security benefits, the surging hash rates of Ethereum Classic and Ravencoin will come at a cost to miners by slashing their rewards.
Bob Summerwill, the executive director of ETCCooperative, an organization providing funding to support the Ethereum Classic ecosystem, told The Defiant the Ethereum Classic network may experience a dramatic spike in hash rate that could wipe mining profits for the short term. He estimated that Ethereum’s PoW hashing power equated to 15 times that of Ethereum Classic.
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“My expectation is a flood of hashrate moving and initially that being neutral or even slightly less than profitable until a new equilibrium is found,” Summerwill said. He added that Ethereum Classic is probably the only major network capable of supporting a large segment of Ethereum’s displaced miners, asserting that “other ecosystems are too small.”
“There are obviously not sufficient emissions for 15x more miners to just appear,” he added.
Ethereum Classic miners are already feeling the effects of the network’s surging hash rate. One Ethereum Classic miner told The Defiant that the sudden influx in hash rate has rendered GPU mining unprofitable.
GPU miners can currently expect “negative profit,” the miner said. The network’s GPU miners are attributing the plummeting profitability to former Ethereum ASIC miners, who operate specialized hardware designed specifically to mine coins using the EtHash algorithm. “Too much ASICs hash rate,” said Tommynn, another Ethereum Classic miner.