In 23 days the Ethereum network will transition to a proof-of-stake (PoS) consensus algorithm after operating as a proof-of-work (PoW) blockchain since July 30, 2015. Although the changes may not be significant to traders and users of ethereum, they are very important.

You’ve heard about the Merge. Why is it a big deal?

The next month will be a significant time for the Ethereum network, and all its participants. The Merge is likely to be one of most anticipated and well-known upgrades since the DAO hard fork. On or around September 15, 2022, Ethereum will implement The Merge and that means the chain will completely change the consensus mechanism it once used. Since the creation of Ethereum’s blockchain, Ethereum’s consensus scheme has been a proof–of-work (PoW), similar to Bitcoin’s.

However, instead of the PoW consensus mechanism SHA256, Ethereum relies on a scheme called Ethash, a PoW consensus agreement preceded by a mechanism known as Dagger-Hashimoto. The main goal of Ethash was to offer ASIC resistance but after a few years, Ethash ASIC miners appeared on the market alongside the use of graphics processing units (GPUs). Ethash miners must submit the computational cost of operating and purchasing ASIC or GPU mining equipment, as well as electricity. This is similar to Bitcoin’s PoW consensus algorithm.

Ethereum won’t rely on miners to validate transactions when The Merge occurs. Validators will validate the transactions of the network. By using a PoS consensus mechanism, Ethereum validators are selected by owning 32 ether and they are required to run three different pieces of software which include a validator, an execution client, and a consensus client. At the time of writing, 13,406,821 ETH has been added to the Ethereum 2.0 contract and there are more than 416,000 validators.

The Ethereum blockchain has been aiming to become a PoS Chain for many years. The Ethereum Foundation provides six different reasons why PoS is an improvement and one of the most talked about is “better energy efficiency.” The Ethereum Foundation’s summary of ETH‘s transition to PoS also says that the consensus mechanism provides “lower barriers to entry” because of “reduced hardware requirements” and “there is no need for elite hardware to stand a chance of creating new blocks.”

Ethereum proof-of-work miners with ASICs or GPUs will need to mine another cryptocurrency asset that leverages Ethash. There are only a few available today. You can choose to mine ethereum classic or ravencoin. A few days ago, on August 20, 2022, Ethereum Classic’s hashrate reached an all-time high. Ethereum (ETH) will follow a new set of consensus rules and mining ethereum with a machine will be obsolete. Although the PoS topic is a hot topic, the progress towards achieving the goal has been very successful.

Currently, Ethereum has a PoS chain called Beacon that runs in parallel to the PoW blockchain network. The Merge has been safely docked by developers with the three major testnets, Ropsten, Sepolia and Goerli. Nine shadow forks have been completed. The Merge will be executed on Ethereum’s main network on or around September 15, 2022, or when the total difficulty reaches 58750000000000000000000. The network will then merge with the PoS consensus mechanism applied to the Beacon chains and the testnets Ropsten and Sepolia.

What do you think about Ethereum changing its consensus mechanism to PoS from PoW?