In terms of usage and hash rate, Ethereum Classic is a PoW chain far less popular than Ethereum.
The proof-of-work (PoW) for Ethereum, powered by GPUs, brought in almost $19 billion in revenue for miners of ETH in 2017. However, these sources of income are in jeopardy because Ethereum is anticipated to switch to a proof-of-stake (PoS) network through “the Merge” in September.
After the hard fork chain split, miners could rebel against the new upgrade by continuing to mine on the outdated Ethereum PoW.
According to a cryptocurrency hedge fund Galois Capital survey survey, 33.1% of respondents think that the Merge will result in the creation of two parallel blockchains, ETH1 (PoW) and ETH2 (PoS).
However, most respondents (53.7%) anticipate a seamless switch from PoW to PoS in Ethereum’s chain.
Is The ETH1 PoW “illogical”?
Challenging fork disputes, however, are nothing new. In truth, the current Ethereum chain was created in 2016 due to a contentious hard fork that split the network into Ethereum and Ethereum Classic to fix a $60 million exploit (ETC).
This is where the debate between ETH1 and Ethereum Classic starts. Some Redditors claim that since Ethereum Classic already exists as a PoW chain, the creation of ETH1 won’t be of “great consequence.”
Additional Reddit comments that illustrate why ETH1 would fail to include:
- Users won’t flock to ETH1
- the nonfungible toke market and decentralized finance will collapse on a PoW chain
- traders will sell their ETH1 tokens to stake more ETH.
Most participants in the Galois Capital survey also think that, in the event of a hard split, exchanges and projects (particularly Tether) will support ETH2 over ETH1.
How Does Ethereum Classic Fare In This Regard?
The Ethereum network’s hash rate has been declining since it hit a record high in May 2022, suggesting that miners are halting or turning off their rigs in the days before the Merge.
On the other hand, they might also be turning into stakers on the PoS chain of Ethereum.
According to Tom’s Hardware GPU Pricing Index, the recent surge in GPU sales in the secondary market (versus decreasing demand) is evidence of the miners’ withdrawal from the Ethereum network.
However, there has also been an increase in social media threads indicating that the miners’ plan following the Merge will probably be to migrate to whichever PoW chain is most lucrative.
According to data from WhatToMine.com, Ethereum Classic has the highest level of interest among miners as of July 29 due to its 116 percent weekly profitability.
ETC’s price has also increased concurrently by almost 200 percent in July.
However, it still remains true that, in comparison to Ethereum, Ethereum Classic is a fairly modest project.
Compared to Ethereum, which has 763,000 daily active addresses as of June 29, Ethereum Classic had over 53,000.
The discrepancy shows that Ethereum Classic’s continued price surge is entirely speculative as a result of the fact that the chain is still only used by a small number of projects. As a result, after the Merge, ETC is unquestionably at risk of a “sell the news” situation.
Additionally, a future ETH1 PoW chain may reduce interest in ETC.
ETC Price Target
As the excitement surrounding the Merge builds, the price of ETC has reached a resistance confluence on the weekly chart and is expecting a breakout.
The 0.786 Fib line (around $43) and a multi-month declining trendline meet at this intersection. The chart below shows that both have traditionally stopped ETC’s bullish aspirations.
Despite this, the token’s ability to reach $75 next is increased by a breakout move because of its proximity to the 0.618 Fib line.
A pullback from either the resistance confluence or the 0.618 Fib line, on the other hand, would cause ETC to consider a decline toward the support region shown above. It is indicated by the red bar, the purple support of the multi-year rising trendline, and the lower trendline of the falling channel (green).
In other words, ETC has the possibility of falling to a price of $10–$12 by September, which would be a 75% decrease from the price on July 29.