Mon, August 15, 2022

ETH Mining Is a Step Closer to Obsolete After an Upgrade

Ether's Gain Enhances the Sharp Narrative of ETH-BTC

On Wednesday, Altair, a significant improvement to the Ethereum (ETH) network, went live. Its immediate influence may be felt only by validators or individuals who verify Ethereum transactions. However, Altair is one of the key upgrades for Ethereum 2.0 or Eth2, and investors should be aware of this. Eth2 will alter the Ethereum infrastructure, eventually rendering mining obsolete. Ethereum currently runs on a proof of work architecture, in which miners compete to solve complex puzzles to validate transactions. This approach is heavily criticized for its environmental impact, as it necessitates a large amount of computer power. In 2022, Ethereum intends to switch to a proof of stake (PoS) paradigm. Users can only validate transactions based on the number of tokens they own.

According to Tim Beiko, the coordinator for¬†Ethereum’s¬†protocol developers, PoS will no longer require the energy of PoW, lowering Ethereum’s environmental impact by 99 percent. Though a complete migration to PoS is unlikely soon, Altair is a significant “step closer,” according to Beiko.

Why the Altair Upgrade Matters

Altair is the Ethereum Beacon Chain’s first upgrade after its introduction in December 2020. The Beacon Chain is significant because it provides Proof of Stake to the Ethereum ecosystem.

According to Beiko, Ethereum currently has both a PoS and a PoW chain running in parallel. Although both chains have validators, only the PoW chain handles user transactions. However, in 2022, the Ethereum blockchain will fully merge with the Beacon Chain, converting it from a PoW to a PoS architecture. Altair is significant because it serves as a sort of test to ensure that the Beacon Chain “functions properly,” according to Beiko. According to him, the upgrade demonstrates that a whole move to PoS is achievable.

It demonstrates that we can enhance the PoS mechanism, a prerequisite for the following year’s migration. It means there’s a slightly better possibility that the changeover will go smoothly next year. Ethereum 2.0, once implemented, will significantly alter the network’s infrastructure. Its goal is to make Ethereum more scalable, safe, and long-lasting.

PoS advocates also claim that it will lessen Ethereum’s environmental effect. It will happen in part because Ethereum 2.0 will eventually render blockchain mining useless, according to Beiko. Instead of the energy-intensive mining machines currently employed, PoS only allows users who are staking, or holding, Ethereum to validate transactions. However, if the transfer happens successfully next year, Ethereum mining will no longer earn revenue. Although it is hard to anticipate the future value of any asset, some suggest that it may impact the price of ether.

Nonetheless, there is still a long way to go before this changeover, according to Beiko. The Altair upgrade only confirms that a PoS switch is likely. Until then, the PoW model will stay in place.


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