JPMorgan says Ethereum miners will see a sudden change after the merge
August 12, 2022 8:24 AM
According to the bank, one of the biggest gainers from the switch to proof-of-stake validation would likely be Ethereum Classic miners.
After the network switches from a proof-of-work (PoW) system to a proof-of-stake (PoS) system, the role of Ethereum miners abruptly changes, requiring them to look for alternate sources of income.
This move, often referred to as the Merge, is the first of five anticipated blockchain updates and is tentatively scheduled to occur in September.
GPU (graphics processing unit) mining rigs, which are more adaptable than those used for bitcoin mining and are simpler to modify to mine for other coins, predominate in Ethereum mining. According to the statement, GPU mining rigs can be utilized for both gaming and mining compatible cryptocurrencies including Ethereum Classic, Ravencoin, and Ergo.
According to the bank, the profitability of mining Ether (ETH) makes it popular, and switching to mining other cryptocurrencies could reduce revenues in the near future. The research also stated that the rapid flood of big mining pools to a different coin would reduce margins for the incumbents. There aren't many options except Ethereum Classic for ether miners employing ASIC (application-specific integrated circuits) hardware.
JPMorgan said that Ethereum Classic (ETC) miners could be among the main beneficiaries of the switch. That’s because there’s likely to be a surge of secondhand mining rigs available from ETH miners that have decided to become validators on Ethereum 2.0.
With a substantial rise in hashrate since mid-July, there are indications that this switch to Ethereum Classic is already happening, according to the bank. Additionally, according to JPMorgan, some investors see Ethereum Classic as a "hedge against any potential interruptions in the Ethereum network during the switch from PoW to PoS."
In order to obtain "salvage value," miners may distribute their rigs across various networks that support GPU mining as well as other applications after Ethereum switches to PoS, according to the note, which also predicted that mining pools will likely transition relatively smoothly as the switchover approaches.