The long-awaited Merge was executed on 15th September and we have been seeing significant computational power increases on nets like ETH Classic and others. Let’s analyse why that is happening and what are the possible scenarios for miners, who lost their main income and investors having to choose between official PoS and knock-off PoS. 🧐
What is Ethereum Classic?
Ethereum Classic or ETC is the older version of Ethereum, that is still maintained by enthusiasts preferring it to the newer Ethereum, backed up by Vitalik Buterin.
Miner flow
According to real-time data, we can witness Ethereum’s computing power quickly moving to Ethereum Classic (ETC) and Ravencoin (RVN). Due to that decrease and a consequent altcoin computing power increase, the complexity is also growing proportionally. Therefore, it is likely that without a significant coin price increase, mining might become less profitable in the long term. 📆
Miners flowing into such coins will lead to a production profitability reduction for the latter. That, combined with the profitability being inferior to Ethereum before too would lead to miners eventually leaving the market completely. However, there is another possible outcome of only the inefficient industry players being forced to leave the market, which will lead to the hash rate stabilising. ✅
Splash Volatility
The price and the amount of computing power in the network are always strongly related. The price of Ethereum Classic has risen by 1.7% and the price of Ravencoin - by 1.5% against the backdrop of neutral market dynamics. Assets with a smaller capitalization have received an even more significant price boost with Cortex (+2.6%), Ergo (+14.3%), Firo (+39.4%), for example showing anomal growth. 📈
At the mean time, Ethereum (-2.2%) is showing moderate post-Merge profit-making itself. We can all agree on the positive dynamics of alternative coins not being everlasting, though. ⏱️
Now when we are seeing a surge in the volatility of Ethereum Classic and Ravencoin, based on the expectations before the hard fork the only strategy that can be appropriate is “buy on rumors, sell on news”. 🗣️
A project with foggy future
The ETHW fork can happen any day and it is pretty obvious that most of the coin holders will try to transfer it to cash with a current rate of about $40 per token. All that is due to low loyalty level. 🫤
Stablecoin issuers, NFT marketplaces, DeFi projects and infrastructure companies are all claiming to only support a PoS asset. None of those are confident about miners having enough resources to duplicate the ecosystem from scratch. Furthermore, attracting users to their copy paste would be a rather difficult task. 😬
Obviously, there is a slight probability of ETHW surviving and succeeding, but most experts are predicting the fate of all the numerous Bitcoin forks, which aren’t necessarily dead, but are not too alive and blooming either. 🫡
Numbers show it all
In fact, the combined ETC and RVN hashrate increase is only a 0.065% fraction of a total 1,000 TH/s computing power that was available to Ethereum network by September 1. The only question arising is where will the rest of this power be sent. ❓
Perhaps, it will be ETHW, because there is simply no other cryptocurrency able to accommodate such a huge amount of hashrate power utilising it all rationally. 🧮
Conclusion
We are sure about most of the miners choosing ETHW as the net to provide their computational power to. We are, however, full of doubt about ETHW being any good and getting close to ETH in terms of market cap and user number. The only advice we can give right now is to think twice before buying the hardfork’s coin.
Stay tuned 📻
