In 23 days, the Ethereum network will transition to a proof-of-stake (PoS) consensus algorithm after operating as a proof-of-work (PoW) blockchain since July 30, 2015. While this change doesn’t mean much to Ethereum users, what changes under the hood is a revolution.
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Next month will be a unique time for the Ethereum network and its users. The Merge will likely be one of the most anticipated and recognizable updates the blockchain has seen since the DAO hard fork. On or around September 15, 2022, Ethereum will implement the merge, which means the blockchain will completely change the consensus mechanism it previously used. Since the blockchain’s inception, Ethereum’s consensus mechanism has been a proof-of-work (PoW) scheme, similar to Bitcoin’s consensus mechanism.
However, instead of the SHA256 PoW consensus mechanism, Ethereum relies on a scheme called Ethash, a PoW consensus agreement preceded by a mechanism known as Dagger-Hashimoto. The main purpose of Ethash was to provide resistance to ASICs, but after a few years, Ethash ASIC miners appeared on the market in parallel with the use of graphics processing units (GPUs). Like Bitcoin’s PoW consensus algorithm, Ethash miners must bear the computational costs of purchasing and operating ASIC or GPU miners, as well as the use of electricity.
When the merger takes place, Ethereum will no longer rely on miners to validate transactions. Instead, network transactions will be validated by entities called validators. Using a PoS consensus mechanism, Ethereum validators are selected by owning 32 ethers and are required to run three different pieces of software that include a validator, an execution client and a consensus client. Today, 13,406,821 ETH has been added to the Ethereum 2.0 contract and there are over 1 million users. 416,000 validators.
The Ethereum blockchain’s roadmap has been planning for several years to become a PoS chain. The Ethereum Foundation provides six different reasons why PoS is an improvement and one of the most mentioned is “better energy efficiency“. The Ethereum Foundation’s summary the ETH transition to PoS also states that the consensus mechanism provides “lower barriers to entry“due to the “reduced material requirements” and “it is not necessary to have elite equipment to have a chance to create new blocks.“
Ethereum proof-of-work miners, those with ASICs and GPUs, will need to mine another cryptographic asset that leverages the Ethash algorithm and there are a few out there today. Miners can choose to mine ethereum classic, ravencoin, ergo, beam, and possibly a new PoW Ethereum fork created during The Merge transition. A few days ago, on August 20, 2022, Ethereum Classic’s hashrate reached an all-time high. Ethereum will follow a new set of consensus rules and mining ethereum with a machine will be obsolete. While the topic of PoS has been the subject of much discussion, the development towards this goal has also been successful.
Currently, Ethereum operates a PoS chain called the Beacon chain that runs in parallel with the PoW blockchain network. The developers have securely docked the merge to the three main test networks – Ropsten, Sepolia and Goerli – and about nine shadow forks have been executed. The merge will be executed on the main Ethereum network on or around September 15, 2022, or when the total difficulty reaches 58750000000000000000000. At that time, the network will merge with the PoS consensus mechanism that has been applied to the Beacon chain and the Ropsten, Sepolia and Goerli test networks.