One of the most covered criticisms of Ethereum since its inception in 2015 has been its gigantic energy consumption.
Although not as heavy as Bitcoin, it still consumes 0.2% of the world’s electricity and is responsible for 20% to 39% of the electricity consumption of the cryptocurrency as a whole (Bitcoin claims between 60% and 70%).
Today and in the future, this energy consumption has dropped by 99.95% as a result of the successful merger. It’s an amazing feat.
What is Ethereum PoW Token?
Miners will therefore have to find another coin to mine. However, some cling to the hope that an Ethereum fork will maintain the Proof-of-Work validation consensus that will allow them to continue mining.
The PoW token will be airdropped to Ethereum holders, with its price fluctuating significantly over the past few days. Peaking at $60, it is currently trading at $18.
How does Ethereum mining work?
Ethereum miners have until now used powerful computers called ASICs to validate transactions. With staking, this is no longer necessary, which means their livelihoods are in question. Many have switched to other cryptocurrencies in order to continue mining them, and the effect of this can be seen in the hash rate of these other cryptocurrencies.
Hash rate is a measure of computing power on a network and is a key security indicator – the higher the hash rate, the higher the security, as more miners need to verify transactions. For Bitcoin, the hash rate hit an all-time high last week.
Let’s zoom in on this year.
This shows that the hash rate opened the year at around 170 PE/s, but is now north of 200 PE/s (and hit 280 PE/s earlier this week). This is despite Bitcoin price falling from $40,000 to below $20,000.
More interesting, however, is the hash rate hike seen on Ethereum Classic. This has been drastic, going from around 50 TH/s last week to over 300 TH/s. This indicates that Ethereum miners are switching to the classic variant with their gear – a much easier switch than what would be required to switch to Bitcoin.
Indeed, other coins have also seen their hash rates increase – Monero, Ravencoin, Ergo, to name a few.
For miners who have not opted for alternatives, they hope that the Ethereum PoW alternative will prevail. Otherwise, they will end up with expensive ASICs and no real use cases, now that Ethereum is proof-of-stake and no longer generates miner revenue.