We have an Ethereum merge update for you. According to some investors, we are in a crypto winter. According to others, now is an excellent buying opportunity. So far this year, many crypto investors have had a rough time. It’s hard to say if your favorite coin will make a comeback.
The majority of digital coins are very dependent on the price swings of Bitcoin and Ethereum. These two crypto giants are responsible for two-thirds of the entire market cap in the industry. They are also responsible for as much CO2 emissions as an entire country. Bitcoin mining consumes as much yearly energy as Norway, while Ethereum consumes as much as Finland.
Ethereum announced a long-awaited update for the Ethereum Merge. This event has been in the works since the coin’s creation in 2014. The date for the Ethereum Merge was September 19th, 2022. Why does this event matter so much for Ethereum? It’s a big deal for many reasons. Let’s find out more in our Ethereum Merge update.
Ethereum Merge Update: Crypto and the Environment
Mining crypto isn’t as easy as finding a goldmine and extracting precious metal. To mine Bitcoin or Ethereum, miners must solve complex cryptographic puzzles and equations with the help of powerful computers.
Thousands of miners compete simultaneously to solve the code and validate a block. Upon successful validation, miners receive prizes. This concept is called proof of code. Unlike stock market transactions, this concept is decentralized.
No central network is in charge of the operation, but many independent ones. A regular trader cannot mine crypto from the comfort of their laptop or smartphone at home.
Warehouses are set up around the world to complete this task. In some countries, a lot of pollution is created when electricity is produced. While in others, like Canada, mining is much more environmentally friendly due to hydroelectricity.
Many mining rigs are set up near wind and solar farms to decrease the mining footprint. In any case, the cryptocurrency world has been blamed for being environmentally unfriendly.
As we said in the opening paragraph, mining causes as much pollution as entire countries. With the Ethereum Merge update, things have changed.
Ethereum 2.0 Merge
What is the big difference after the Ethereum 2.0 merge happened? The event has been pushed back several times since the coin’s creation in 2014.
Ethereum’s co-creator, Vitalik Buterin, and his partners have been working on proof of stake for years.
According to the Ethereum Foundation, electricity use will decrease by 99.65%. What exactly is proof of stake mean in this Ethereum merge update?
Ethereum Merge Update: Proof of Stake
In our Ethereum Merge update, let’s discuss proof of stake. Proof of stake is a relatively new concept that emerged with the rise of cryptocurrencies. Instead of using computer power, Ethereum owners will now use their coins as collateral for a chance to validate blocks.
Thus, they become ‘’validators’’. To be eligible, they must stake 32 ether, representing tens of thousands of dollars at current price levels. Ethereum creators emphasize that it will be a much more environmentally friendly way of mining the coin.
However, not everyone possesses 32 ether coins. Miners can join forces for a chance to validate the block and share the prize. Today, there are more than 300K validators.
Ethereum’s current blockchain, called ‘’the mainnet’’ will merge with the new blockchain, called ‘’the beacon chain’’. All the data will be transferred.
Is Proof of Stake Safe?
Many Ethereum owners might be reading this and wondering if this is another crypto scam. We found in our Eutherum merge update that, according to developers, it is safe. There can be bugs every once in a while, but they won’t disrupt the functioning of the blockchain.
Some critics believe someone with enough capital might act maliciously and buy the entire system. This happens when one individual or group owns 51% or more of a cryptocurrency. Fortunately, there is a system in place called ‘’slashing’’.
When a network is attacked, the users’ access is revoked permanently, and the entire wallet with all the funds is gone. This forces everyone to act in good faith. There exist other safety measures in place to prevent this kind of event.
Crypto Prices: What’s Next?
The big question in this Ethereum Merge update is will crypto prices return if more coins switch to proof of stake. Ethereum’s price certainly soared after the merge news.
However, it might not be entirely related to the news. Since the beginning of the year, investors have been distant with riskier investments due to fears of a recession and rising inflation.
Crypto stocks and prices have been hit hard this year. Even with the Ethereum Merge, it is uncertain that prices will return to their November 2021 levels. As for Bitcoin, there aren’t any signs of a proof of stake transition.
One thing is for sure, Ethereum and other proof of stake followers are making a case that they are a much more attractive investment due to their significantly lower carbon footprint.
However, many technical questions remain unanswered. Many crypto investors are still wary after the Terra/Luna fiasco earlier this year. We are still in unknown territory, and understanding the mechanisms behind cryptos and blockchain technology isn’t simple.
For those looking for crypto stocks and who would like to diversify their holdings while putting less risk, below is a list of stocks worth a look at.
Coinbase Global (NASDAQ: COIN): Coinbase is near its all-time low stock price. If the crypto market rebounds, so will this stock. The platform sells more than 100 cryptocurrencies. With each transaction, the company is making money. If the crypto winter ends, look for a run by Coinbase.
Canaan (NASDAQ: CAN): Canaan is a Chinese computer hardware manufacturer. The company specializes in mining. They brute-force guess the code thanks to their high-performing Bitcoin mining infrastructure. Better technology means more Bitcoins. Canaan needs Bitcoin’s price to rise and some good news in the crypto world.
Hut 8 Mining (NASDAQ: HUT): Hut 8 is a Canadian company specializing in Bitcoin mining. As we mentioned earlier, Canada has some of the best environmentally friendly conditions for mining. Hut 8 is taking advantage of that. Furthermore, it lends its Bitcoins to generate interest revenue.
Marathon Digital Holdings (NASDAQ: MARA): MARA was the largest crypto mining company by market cap. It is back to normal levels now. The company is expanding its business in the US with a facility in Texas. They want to increase Bitcoin production with more miners and a faster hash rate.
We hope these other stocks in our Ethereum Merge update helped.
Ethereum Merge Update Conclusion
To conclude, with this Ethereum Merge update, all the details are out, and developers wanted to ensure there will be no technical issues before fully transitioning from proof of code to proof of stake.
One thing is for sure, the environmental impact of Ethereum will be significantly diminished.
In the meantime, investors can purchase the coin on one of the many platforms or invest in public companies working in the crypto field. It is a very volatile industry, and investors must be very careful.