Ethereum has been talking about phasing out GPU-based mining for years. But the topic entered the limelight last year amid a GPU shortage that saw cryptocurrency miners hoarding graphics cards, making it difficult for average consumers to buy them, too.

 

What is the Merge?

 

In case you’re late to the party, don’t worry. The Merge is a part of a series of upgrades to the Ethereum network aimed at making it more scalable and efficient. The Merge transitioned the network from a proof-of-work blockchain to a proof-of-stake blockchain. 

 

Why was the Merge necessary?

 

Well, it starts with the problems with proof-of-work. Just like Bitcoin - Ethereum was built on a proof-of-work blockchain:  a network of computers solving cryptographic problems verifies the transactions on the blockchain.

 

However, even though proof-of-work can create a highly secure network, it is very energy-intensive. With the Merge, the network has shifted to a proof-of-stake consensus mechanism, which will be less energy intensive.

Early Thursday morning, the cryptocurrency fully switched(Opens in a new window) over to a 'Proof of Stake' algorithm, ending Ethereum’s long dependence on a traditional mining model. 

The transition, dubbed “The Merge,” means Ethereum has now cut its power consumption demands by as much as 99.95%. It also means cryptocurrency miners can no longer use their PC graphics cards to generate Ethereum. Instead, they’ll have to settle for other mine-able virtual currencies worth far less or consider selling their GPUs.

What is Proof-of-Stake?

 

In a proof-of-stake blockchain, participants can lend their tokens to the network and earn yield on their lent money. In the case of Ethereum, now that the Merge is complete, anyone with at least 32 Ether tokens can establish themselves as a validator on the network and earn a yield. Proof-of-stake avoids wasting electricity by making the network’s participants stake some of their money - similar to an escrow account - to prove honest intent.

Since then, the GPU market has flipped, resulting in an oversupply situation. Ethereum’s plan to phase out mining by this month also likely caused miners to stop buying GPUs. You can now find some RTX 3090 GPUs selling for $800 to $900 on eBay, or about half their original prices.

 

Ethereum’s successful transition to Proof of Stake is certainly good news for anyone worried about miners buying up next-generation GPUs. NiceHash, a provider of mining software, said(Opens in a new window) on Thursday: “The mining community has come to an end of an era. Ethereum was the number one ASIC-resistant coin that most GPU miners mined since 2014.”

Do You Believe So?