What is Merger? A Brief Explanation of Ethereum’s Transition from Proof of Work to Proof of Stake CoinBlog

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 change will mean little to Ethereum users and traders, what changes under the hood is very important.

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Next month will be a monumental time for the Ethereum network and its participants. The merger will likely be one of the most anticipated and recognizable upgrades the blockchain has seen since the DAO hard fork. On or around September 15, 2022, Ethereum will implement The Merge, meaning the chain will completely change the consensus mechanism it once used. Since the inception of the blockchain, Ethereum’s consensus mechanism has been a proof-of-work (PoW) scheme, similar to Bitcoin’s consensus mechanism.

However, instead of the SHA256 PoW consensus mechanism, Ethereum relies on a scheme called Ethash, a PoW consensus agreement preceded by a mechanism known as Dagger-Hashimoto. The main purpose of Ethash was to offer ASIC resistance but after a few years, Ethash ASIC miners appeared in the market alongside the use of Graphics Processing Units (GPUs). Similar to Bitcoin’s PoW consensus algorithm, Ethash miners must put forward the computational cost of buying and operating ASIC or GPU miners, and using electricity.

What is Merger?  A Brief Explanation of Ethereum's Transition from Proof of Work to Proof of Stake

When the merger takes place, Ethereum will not depend on miners to validate transactions. Instead, network transactions will be validated by entities called validators. Using a PoS consensus mechanism, Ethereum validators are selected by owning 32 ethers and they must run three different pieces of software which include a validator, runtime client, and consensus client. At the time of writing, 13,406,821 ETH have been added to the Ethereum 2.0 contract and there are over 416,000 validators.

The Ethereum blockchain roadmap has been planning to become a PoS chain for several years. The Ethereum Foundation provides six different reasons why PoS is an improvement and one of the most cited is “better energy efficiency”. The Ethereum Foundation’s summary of the transition from ETH to PoS also states that the consensus mechanism offers “lower barriers to entry” due to “lower hardware requirements” and “there is no need so that elite gear has a chance to create new blocks”.

Ethereum proof-of-work miners, those with ASICs and GPUs, will need to mine another crypto asset that leverages the Ethash algorithm and there are quite a few of these today. Miners can choose between classic ethereum mining, ravencoin, ergo, beam and possibly a new Ethereum PoW fork created amid The Merge transition. A few days ago, on August 20, 2022, the Ethereum Classic hashrate hit an all-time high. Ethereum (ETH) will follow a new set of consensus rules and mining Ethereum with a machine will be deprecated. Although the subject of PoS has been much discussed, the development towards achieving the goal has also been successful.

Currently, Ethereum runs a PoS chain called the Beacon chain that runs alongside the PoW blockchain network. The developers safely docked The Merge with the three main testnets – Ropsten, Sepolia and Goerli – and around nine phantom forks were run. The merge will be executed on the Ethereum mainnet on or around September 15, 2022, or when the total difficulty reaches 587500000000000000000000. At that time, the network will merge with the PoS consensus mechanism that has been applied to the Beacon Chain and the Ropsten, Sepolia and Goerli testnets.

Keywords in this story

Beacon Chain, Beam, Ergo, ETH, ETH 2.0 Contract, Ethash, Ethash Mining, Ether, Ether PoS, Ether PoW, Ethereum, Ethereum (ETH), Ethereum Classic, Goerli, Hashrate, PoS, PoS Consensus, Consensus Mechanism PoS, PoS Validators, PoW, Ravencoin, Ropsten, Sepolia, Terminal Total Difficulty, The Merge, Total Difficulty

What do you think of Ethereum changing its consensus mechanism to PoS from PoW? Let us know what you think about this topic in the comments section below.

Jamie Redman

Jamie Redman is the News Manager at News and a fintech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written over 5,700 articles for News about disruptive protocols emerging today.

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