Skip to content

The Merge is Happening. Here’s What You Need to Know

Table of Contents

Google “The Merge” and you’ll see a countdown clock for what is arguably the biggest network upgrade the crypto ecosystem has ever experienced.

At the time of writing, the Merge is scheduled to go live in 5 mins, with many within the industry already kicking off the festivities by hosting in-person and online parties. The Ethereum Foundation is currently live streaming an Ethereum Mainnet Merge Viewing Party, while the Blockhead team is attending a watch party organised by ethSG at SUSS (Singapore University of Social Sciences).

Exchanges and lending platforms have also temporarily disabled Ethereum-related services including deposits and withdrawals.

Ethereum’s groundbreaking upgrade will see the network transition from Proof-of-Work to Proof-of-Stake, drastically improving the network’s scalability while decreasing its energy usage, henceforth solving many of its current shortcomings.

Here’s what you need to know about “The Merge”:

Bye bye mining

Ethereum’s shift to a Proof-of-Stake consensus mechanism means that it will no longer be possible to mine Ether on the Ethereum network, spelling the end of Ether mining companies as the graphic cards used to authenticate transaction data will be replaced with validators that stake Ether.

“As a consequence of this transition, the Ethermine Ethereum mining pool will switch to withdraw-only mode once the Proof-of-Work mining phase has ended,” Ethermine, the world’s Ether mining firm tweeted on Wednesday.

“All Ethermine stratum servers will be shut down, and you will no longer be able to connect your miner to the Ethermine Ethereum pool”, said the company.

According to Digiconomist, Ethereum miners currently consume 44.49 TWh per year, or approximately 5.13 gigawatt on a continuing basis. This means that Proof-of-Stake is 2000x more energy efficient based on the conservative estimates above, which reflects a reduction of at least 99.95% in total energy use.

Depending on the success of Ethereum 2.0, more ecosystems could also implement Proof-of-Staked-based consensus mechanisms, given how the the crypto industry has always been under the limelight for its vast energy consumption (thanks Bitcoin!).

Read more: Sorry, But Ethereum Can’t Be Killed

“Without a doubt, one of the most significant changes will be the environmental impact, both from utilising a less-energy intensive proof-of-stake mechanism, but also through the pivot of crypto mining operations towards staking”, Daniel Dizon, CEO and co-founder of Swell Network, told Blockhead.

“A reduction in energy consumption of almost 99 percent will also help the industry to align with wider sustainability objectives, helping to bring in greener investments and address the longstanding criticism of crypto’s environmental unfriendliness”, he said

Ethereum 2.0 is also set to introduce “sharding,” which will split the network into smaller portions known as “shards,” therefore allowing more people to participate in the network and increasing its scalability while maintaining a degree of decentralisation.

Buy buy Ethereum?

ETH has enjoyed sporadic price rallies despite the ongoing hawkish chatter – it’s currently sitting at around US$1,596.78, or down by about 2% over the past week. While it’s up by nearly 80% since it’s June low partly due to the anticipation for Ethereum 2.0, investors could also be seeking to take profits after The Merge, given the current macroeconomic conditions.

“On the ETH merge later today, we do not expect any fireworks on the POS side, so the event itself will likely be a vol killer. ETH vols remain elevated above 100 vols across the curve, as market makers refrain from getting shorter into the merge, but the decay from the longs looks unsustainable against the realized”, said QCP Capital in a note Thursday.

According to Dizon, the long-term outlook of Ethereum remains robust, due to its potential as the “building block for Web3”.

“Notwithstanding headline inflation running in hot in Tuesday’s CPI, ETH’s price continued to hold relatively steady against the broader market decline, led by the anticipated Merge event. We expect this decoupling move to continue in the near term as investors digest the long-term implications of the Merge such as improved energy efficiency, the rise of the staking economy, and ETH becoming potentially deflationary”, he added.


Hong Kong Cracks Down on Worldcoin's Data Collection Practices

Hong Kong Cracks Down on Worldcoin's Data Collection Practices

Authorities found that Worldcoin failed to adequately inform users about the collection of their personal data and did not obtain their informed consent. Worldcoin also retained user data for extended periods beyond what was necessary and did not provide a Chinese translation of its privacy policy.