Ethereum’s proof-of-work (PoW) powered by GPUs generated approximatelylast year for ETH miners. But these revenue streams are in danger as Ethereum is expected to become a proof-of-stake (PoS) blockchain via upgrade in September.
Miners could then revolt against the new upgrade by continuing to mine on the old Ethereum PoW after thechain split.
A survey from crypto hedge fund Galois Capital recently revealed that 33.1% of respondents believe that the Merge would create two parallel blockchains: ETH1 (PoW) and ETH2 (PoS).
Question 1: What happens during the merge? If Choice 2 or 3 go to Questions 2-5.
— Galois Capital (@Galois_Capital)
Nevertheless, most respondents, or 53.7%, expect Ethereum’s chain to smoothly transition from PoW to PoS.
Is the ETH1 PoW «illogical»?
But contentious hard forks aren’t anything new. In fact, the current Ethereum chain came to be in 2016 following a controversial hard fork aimed at reversing, resulting in a chain split with Ethereum and Ethereum Classic ( ).
This is where the argument of Ethereum Classic versus ETH1 begins. Since Ethereum Classic is already a PoW chain, creating a similar chain, ETH1, will not have «,» according to some redditors.
Several other comments from Reddit explaining why ETH1 will fail include:
Meanwhile, most respondents in the Galois Capital survey also believe that exchanges and projects (especially Tether) will support ETH2 over ETH1 in the event of a hard fork.
Question 4: How do exchanges handle perps and futs?
— Galois Capital (@Galois_Capital)
What does it mean for Ethereum Classic?
After reaching a record high in May 2022, the Ethereum network’s hash rate has been downtrend ever since, indicating that miners are pausing or shutting down their rigs in the weeks leading up to the Merge.
On the other hand, they could also be becoming stakers on the Ethereum’s PoS chain.
The miners’ exit from the Ethereum network is visible in the recent increase in GPU sales in the secondary market (against lower demand), according to.
Nonetheless, there’s also an uptick in thethat shows the miners’ strategy post the Merge will likely be to switch to whatever PoW chain is more profitable.
As of July 29, Ethereum Classic was topping miners’ interest for its 116% weekly profitability, data on.
Amazing — miner revenue/hash in USD for ETC has just surpassed that for ETH… (chart)
— Noelle Acheson (@NoelleInMadrid)
Simultaneously, the price of ETC hasby more than 200% in July.
But that does not take away the fact that Ethereum Classic is a very small project compared to Ethereum.
As of June 29, the Ethereum Classic had over 53,000 daily active addresses versus Ethereum’s 763,000.
The difference suggests that ETC’s ongoing price boom is purely speculative since Ethereum Classic remains largely underutilized as a chain and with only a handful of projects. Therefore, ETC is certainly at risk of a «sell the news» event after the Merge.
At the same time, a potential ETH1 PoW chain may also push down demand for ETC.
ETC price target
On the weekly chart, ETC’s price has reached a resistance confluence, awaiting a breakout as the euphoria surrounding the Merge grows.
The confluence comprises the 0.786 Fib line (~$43) and a multi-month descending trendline. Both have historically capped ETC’s bullish attempts in the past, as the chart below illustrates.
Nonetheless, a breakout move increases the token’s potential to hit $75 next, due to its proximity to the 0.618 Fib line.
Conversely, a pullback move from either the resistance confluence or the 0.618 Fib line could have ETC eye a drop toward the support area illustrated above. It is defined by the red bar, the multi-year rising trendline support (purple), and the descending channel’s lower trendline (green).
In other words, ETC risks dropping toward the $10-$12 area by September, down 75% from today’s price.
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