Ethereum ($ETH) miners are facing a conundrum and asking themselves hard questions about the upcoming “merge”. Most are wondering what are they going to do with more the than $5Billion worth of equipment and where will they move their hash rate to after the merge?
$ETH miners who helped make Ethereum the world’s second largest crypto are counting the days until the network locks them out and begins using proof of stake to validate transactions on the network.
There are now rumors that some of the larger miners who helped fork the network from Ethereum Classic ($ETC) are willing to do so again. I’m sure the thought of this is very exciting to companies who support mining like $NVDA and $AMD, not to mention the hordes of little miners who are part of the 880Th/H currently mining on the network.
Why go proof of stake and why would Vitalik Buterin do this?
Buterin claims it’s to reduce energy consumption, however, with the world moving into electric cars, cloud computing and X boxes still in every household, it’s easy to see how ridiculous this alleged reasoning sounds.
During the merge preparation process the Ethereum network has reduced payouts to miners, which, along with higher energy prices, has squeezed their profits significantly over the past year.
Cutting off the dilution will theoretically make the asset more valuable, but, instead of awarding ether to the miners, the coins will be awarded to the validators who are hosting the nodes for the transactions. This method allows those who already own significant amounts of $ETH to make additional $ETH for processing the transactions.
The largest account holders, including the long list of founders and venture capitalists, will look to earn huge profits on the network without the dilution of miners, as they will be paying themselves more $ETH instead of paying out to miners across the world.
This will, purportedly, keep the flow of $ETH into the market for sale in short supply, as the validators will control the dilution. With Web-3 and NFT projects using the network, the news and marketing will earn them all significant wealth, which they were sharing with miners.
The merge is nothing more than the large holders cutting out the smaller players to keep more for themselves; earning interest on an asset that technically could keep rising if people keep trading it after the merge.
Validators controlling dilution is no longer a free market, as they can effectively control the upward price movement by not selling. In fact, this centralized control is one of the most troubling aspects of this move, because that’s the antithesis of what the cryptocurrency and DeFi movement is all about.
Let’s face it, every week we learn about another damaging cryptocurrency revelation, which only further exposes that the entire industry may be nothing more than a paper tiger. The industry’s experts are not experts at anything.
Like a penny stock or collectable, it’s a fun space to trade, but blockchain and the currencies have limited real real-world use or application.
There is no argument that can defeat common sense and the truth. It’s like these guys are setting up the network for their own personal greed and to keep taking money from a naïve public who used to believe the “hyped” up asset. So, be careful trading and investing out there.