Ethereum (ETH)
Ethereum (ETH)
$1 355.73 (-0.32 %) View coin
01 Aug 2022

As the Ethereum merge approaches, a key miner is pushing a proof-of-work fork

As the Ethereum merge approaches, a key miner is pushing a proof-of-work fork

As Ethereum inches closer to its switch to proof-of-stake consensus — the long-awaited shift known as "the merge" — the community is facing the possibility of a miner-led fork that will split the network.

The idea has gained fresh impetus after Chandler Guo, an influential Chinese crypto miner and investor, declared on Twitter last week he would fork the Ethereum blockchain to what he called “ETH POW,” allowing miners to continue operations after the merge.  

The merge — which is planned for the coming months — will transition Ethereum from proof-of-work (PoW) consensus to proof-of-stake (PoS). That will remove the need for transactions to be verified by miners, who have spent billions of dollars buying graphical processing unit (GPU) chips to mine new blocks. 

Because of this, Ethereum developers have long anticipated that the merge would be unpopular with miners and made arrangements to counter their interference — including a "difficulty bomb" that will make it significantly harder to mine new blocks.

But while miners can’t stop the merge, they can clone Ethereum and create their own version of the network where the transition never takes place. The question is whether they can attract anyone to use their forked version.

Guo has form here. He was involved in forking Ethereum in July 2016, which resulted in the formation of Ethereum Classic. Now Guo wants to repeat the feat by acquiring enough hash power — a measure of  crypto mining output — and convincing other miners to join him.

“I fork Ethereum once, I will fork it again,” Guo wrote in a post last week.

If he's successful, the Ethereum network will split into two chains: the non-canonical PoW version operated by the miners and the default PoS chain run by Ethereum core developers and validators.

Ether holders would receive tokens on the new chain as the network is copied, albeit at a much different price. As forked POW ETH comes into existence, its native asset will have to be freshly listed on crypto exchanges and experience new price discovery — with no guarantee the forked tokens will have any value.

Start afresh

While the forked chain would be free to continue with PoW consensus, it won't necessarily bring along any of the ecosystem of apps and developers that give value to the Ethereum mainnet and its ether token. Development would have to start from scratch on ETH POW, with smart contracts freshly deployed and maintained.

Furthermore, the forked PoW chain will lack critical assets like stablecoins needed to support functioning decentralized finance apps. This is likely to make the forked network less appealing to users, unless stablecoin firms decide to add support. In this regard, Paolo Ardoino, chief technology officer of the body behind the tether stablecoin, clarified in a Twitter post on Sunday that it would support the PoS version over the proposed PoW fork.

A fork is not the only option left for miners. There have also been talks about migration to Ethereum Classic, which will continue to use PoW consensus even after the main Ethereum network switches to PoS. AntPool, a pool operated by mining giant Bitmain, has signaled support for Ethereum Classic and made a $10 million investment in its ecosystem.

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