JPMorgan: Ethereum Miners Face an Abrupt Change Following the Merge

JPMorgan: Ethereum Miners Face an Abrupt Change Following the Merge

 

Ethereum miners are facing an abrupt change after the Blockchain Technology Network moves to a proof-of-stake (PoS) consensus system from a proof-of-work (PoW) mechanism and their role effectively ends, forcing them to seek alternative way of income streams, JPMorgan (JPM) said in a research report released on 11^th August.

 

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This shift, also known as the Ethereum Merge, is the first of five planned upgrades for the Ethereum Blockchain Technology and is provisionally expected to take place in next month.

 

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Ethereum Blockchain Technology mining is dominated by GPU (graphics processing units) rigs, which are more dynamic than those used for bitcoin mining and can be more easily reconfigured to mine for other digital coins. GPU rigs can be also used for mining compatible Cryptocurrencies such as Ethereum Classic, Ravencoin and Ergo as well as for gaming, it said.

 

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Ethereum (ETH) mining is prevalent because of its profitability, the investment bank said, and a shift to mining other Digital Currencies could mean a hit to profits in the near term. In addition, the sudden influx of large mining pools to a different token could squeeze margins for the incumbents, the report further added. Those Ethereum miners using ASIC (application-specific integrated circuits) equipment have very few alternatives beyond Ethereum Classic.

 

Ethereum Classic (ETC) miners could also be among the main beneficiaries of the merge, JPMorgan said. That is because there is likely to be a surge of secondhand mining rigs available from Ethereum miners that have decided to become validators on Ethereum 2.0.

 

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There are signs this change to Ethereum Classic is already taking place, with a noticeable increase in the hash rate since mid-July, the investment bank said. Some users also view Ethereum Classic as a “hedge against any potential disruptions in the Ethereum blockchain technology during the shift from PoW to PoS,” according to JPMorgan report.

 

The most probable outcome after Ethereum moves to PoS may be that miners distribute their rigs across different Blockchain Networks that support GPU mining, as well as other applications to get “salvage value,” the note said, adding that as the changeover approaches, mining pools will likely transition relatively effortlessly.