Proof-of-Work

Ethereum Merge spikes block creation with a faster average block time

Some of the evident improvements experienced by the blockchain post-Merge include a steep increase in daily block creation and a substantial decrease in average block time.

The Merge upgrade for Ethereum, which primarily sought to transition the blockchain into a proof-of-stake (PoS) consensus mechanism, has been revealed to have had a positive impact on the creation of new Ethereum blocks.

The Merge was considered one of the most significant upgrades for Ethereum. As a result of the hype, numerous misconceptions around cheaper gas fees and faster transactions plagued the crypto ecosystem, which were debunked by Cointelegraph. However, some of the evident improvements experienced by the blockchain post-Merge include a steep increase in daily block creation and a substantial decrease in average block time.

Ethereum blocks per day. Source: YCharts

On Sept. 15, Ethereum completed the Merge upgrade after successfully transitioning the network to PoS. On the same day, the number of blocks created daily shot up by roughly 18% — from approximately 6,000 blocks to 7,100 blocks per day.

Ethereum average block time (EBT). Source: YCharts

Complementing this move, the average block time — the time it takes the miners or validators within a network to verify transactions — for Ethereum dropped over 13%, as evidenced by data from YCharts.

The above findings showcase the positive impact of the Merge upgrade on the Ethereum blockchain.

Related: Ethereum Merge was ‘executed flawlessly,’ says Starkware co-founder

Following the Ethereum upgrade, GPU prices in China saw a significant drop as the blockchain moved away from the power-intensive proof-of-work (PoW) consensus mechanism.

As Cointelegraph reported, the Nvidia GeForce RTX 3080’s price dropped from 8,000 yuan, or $1,118, to 5,000 yuan within three months, according to a Chinese merchant. The merchant further stated that no one in China is buying new computers, let alone new GPUs.

Ethereum fork token ETHPoW climbs 150% after smart contract hack — A fakeout rally?

ETHPoW’s hash rate and total value locked have risen significantly during its latest bull run.

ETHW has logged a significant price rebound despite its blockchain network, ETHPoW, suffering a smart contract hack in the first week after its launch.

Bull trap risks surround ETHW market

ETHW rebounded more than 150% eight days after the attack and traded for around $10.30 on Sept. 27.

Fundamentally, this suggests that traders ignored the hack and trusted ETHPoW’s long-term viability as a blockchain project.

But from a technical perspective, the ETHW price rally has accompanied weaker trading volumes. In other words, fewer traders have been involved in the pumping of the ETHPoW token’s price in the past eight days, as the Bitfinex exchange data shows in the chart below.

ETHW/USD daily price chart. Source: TradingView

The growing divergence between ETHW’s rising prices and falling trading volumes suggests that traders’ interest in the ETHPoW token has been dwindling. In other words, ETHW’s price risks a sharp correction in the coming days.

Related: Dogecoin becomes second largest PoW cryptocurrency

This “bearish divergence” setup is supported by a descending trendline that has served as resistance for ETHW since Sept. 2. 

On the four-hour chart below, traders have shown their likelihood of dumping their ETHW positions near the said resistance. Moreover, even the token’s latest pullback move on Sept. 27 has originated near the same trendline, raising the possibility of an extended price correction.

ETHW/USD four-hour price chart. Source: TradingView

As a result, ETHW’s short-term technical bias is skewed toward the bears. So, if its correction extends, the PoW token risks falling into the $8–$9 price range, which also coincides with ascending trendline support, or a 25% drop from current price levels.

ETHPoW hash rate recovers

On a brighter note, the ETHPoW’s network hash rate has recovered significantly since the smart contract hack, rising from 29.44 TH/s on Sept. 19 to 48.48 TH/s on Sep. 27. Although, the current hash rate is still down about 40% from its record high of 79.42 TH/s.

ETHPoW hash rate performance since launch. Source: 2miners.com

Still, a rising hash rate means more miners have joined the ETHPoW network after its split from the Ethereum proof-of-stake (PoS) chain on Sept. 15. In theory, it should ensure better protection against potential 51% attacks. 

Simultaneously, ETHPoW has witnessed a growth in its network’s total valued locked (TVL). As of Sept. 27, ETHPoW had 66,548 ETHW deposited across four decentralized exchanges functioning atop its blockchain compared to nearly 38,000 ETHW three days prior, or a 75% increase in the last three days.

ETHPoW TVL as of Sep. 27, 2022. Source: Defi Llama

Interestingly, UniWswap, a fork of the Ethereum blockchain-based decentralized exchange Uniswap, comprises more than 50% of the ETHPoW chain’s TVL.

DApps functional atop ETHPoW chain. Source: Defi Llama

Other DApps include PoWSea, a nonfungible token ( marketplace, as well as exchanges PoWSwap and HipPoWSwap.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

The path moving forward for ex-Ethereum miners remains unclear

It seems that some GPU owners have resorted to selling power to non-crypto projects following the Ethereum Merge.

It’s been nearly two weeks since Ethereum made its historical transition from proof-of-work (PoW) to proof-of-stake (PoS), and some ex-Ether (ETH) miners say they remain clueless on how to move forward. 

Following the Merge, many took to Crypto Twitter to discuss what they believe will happen to these former Ethereum miners. On the day of the merge, Twitter user hashoveride tweeted:

Twitter user BakaMoriDesu suggested in a tweet that ex-eth miners were just going to move on to the next profitable coin, adding, “As an RVN miner, I doubt it will be profitable after the halving anymore.”

Cointelegraph contacted a few ex-Ethereum miners to find out what their plans were moving forward. However, the general consensus revealed that many were still unclear on their next steps. Former miner Christian Ander shared with Cointelegraph:

“To be honest, I don’t know myself yet. Selling GPU power to other computing intense services is far from as profitable as ETH was.”

“I am doing research myself and my partners are looking into options,” Ander added, noting, “GPU owners are doing research and selling power to non-crypto projects. And when the energy prices are very high, they shut down and sell excessive power to the grid.” Ander said that he’s currently not mining any crypto and is just evaluating the market.

Another ex-Ethereum miner, Kevin Aguirre, shared with Cointelegraph that he had sold his hardware to his partner, who was now using it to mine other coins, noting:

“I do have some regret in my outcome with my mining machine, but in the end, it supported me and my family through the pandemic.”

Is post-Merge Ethereum PoS a threat to Bitcoin’s dominance?

Cory Klippsten, the CEO of Swan Bitcoin, shares his views on how “the competition for liquidity” between Bitcoin and Ethereum will play out after the latter’s switch to a proof-of-stake system.

While Ethereum fans are enthusiastic about the successful Merge, Swan Bitcoin CEO Cory Klippsten believes the upgrade will lead Ethereum into a “slow slide to irrelevance and eventual death.” 

According to Klippsten, the Ethereum community picked the wrong moment for detaching the protocol from its reliance on energy. As many parts of the world are experiencing severe energy shortages, he believed the environmental narrative is taking the back seat.

In an exclusive interview with Cointelegraph, Klippsten said “I think the world is just waking up to reality and Ethereum just went way off into Fantasyland at the exact wrong time.”

“It is just really bad timing to roll out that narrative. It just looks stupid.”

According to some predictions, institutional capital will increasingly turn away from Bitcoin (BTC) and flow into Ethereum if Bitcoin doesn’t move away from the energy-consuming proof-of-work system.

Klippsten dismisses this narrative as false, citing that, ultimately, all valuable technologies need to rely on real-world energy to function correctly.

“If you don’t have some tethering to the real world using laws of physics, you’re basically off creating some kind of like metaverse fantasyland.”.

Watch the full interview on our YouTube channel and don’t forget to subscribe!

ETHW confirms contract vulnerability exploit, dismisses replay attack claims

The proof-of-work fork of the Ethereum blockchain was targeted by a cross-chain contract exploit.

Post-Ethereum Merge proof-of-work (PoW) chain ETHW has moved to quell claims that it had suffered an on-chain replay attack over the weekend.

Smart contract auditing firm BlockSec flagged what it described as a replay attack that took place on Sept. 16, in which attackers harvested ETHW tokens by replaying the call data of Ethereum’s proof-of-stake (PoS) chain on the forked Ethereum PoW chain.

According to BlockSec, the root cause of the exploit was due to the fact that the Omni cross-chain bridge on the ETHW chain used old chainID and was not correctly verifying the correct chainID of the cross-chain message.

Ethereum’s Mainnet and test networks use two identifiers for different uses, namely, a network ID and a chain ID (chainID). Peer-to-peer messages between nodes make use of network ID, while transaction signatures make use of chainID. EIP-155 introduced chainID as a means to prevent replay attacks between the ETH and Ethereum Classic (ETC) blockchains.

BlockSec was the first analytics service to flag the replay attack and notified ETHW, which, in turn, quickly rebuffed initial claims that a replay attack had been carried out on-chain. ETHW made attempts to notify Omni Bridge of the exploit at the contract level:

An analysis of the attack revealed that the exploiter started by transferring 200 WETH through the Omni bridge of the Gnosis chain before replaying the same message on the PoW chain, netting an extra 200 ETHW. This resulted in the balance of the chain contract deployed on the PoW chain being drained.

Related: Cross-chains in the crosshairs: Hacks call for better defense mechanisms

BlockSec’s analysis of the Omni bridge source code showed that the logic to verify chainID was present, but the verified chainID used in the contract was pulled from a value stored in the storage named unitStorage.

The team explained that this was not the correct chainID collected through the CHAINID opcode, which was proposed by EIP-1344 and exacerbated by the resulting fork after the Ethereum Merge:

“This is probably due to the fact that the code is quite old (using Solidity 0.4.24). The code works fine all the time until the fork of the PoW chain.”

This allowed attackers to harvest ETHW and potentially other tokens owned by the bridge on the PoW chain and go on to trade these on marketplaces listing the relevant tokens. 

Cointelegraph reached out BlockSec to ascertain the value extracted. Yajin Zhou, BlockSec CEO, said his team had not conducted an accurate calculation but highlighted a limit on wrapped ETH transfers (WETH) through the Omni Bridge:

“The bridge has a limit on how many WETH can be transferred. The attacker can only get 250 ETHW per day. Note that this is only for this bridge contract. Such a vulnerability may exist on other projects on the EthereumPoW chain.”

Following Ethereum’s successful Merge event, which saw the smart contract blockchain transition from PoW to PoS, a group of miners decided to continue the PoW chain through a hard fork. 

Bitcoin better than physical property for commoners, says Michael Saylor

Saylor underscored the high maintenance costs and taxes linked with owning and inheriting physical property over the long term, which in the case of Bitcoin, does not exist.

MicroStrategy CEO and Bitcoin (BTC) advocate Michael Saylor doubled down on his support for Bitcoin as he explained the issues related to transferring the value of physical properties such as gold, company stocks or equity and real estate during the Australia Crypto Convention.

Speaking about the underlying proof-of-work (PoW) consensus mechanism, Saylor highlighted that Bitcoin is backed by $20 billion worth of proprietary mining hardware and $20 billion worth of energy. 

He then pointed out that traditional assets such as gold (in high quantity) and land are nearly impossible to carry forward across geographical boundaries, adding:

“If you have a property in Africa, no one’s gonna want to rent it from you if they live in London. But if you have a billion dollars of Bitcoin, you can loan it or […] rent to anybody in the world.”

Saylor further underscored the high maintenance costs and taxes linked with owning and inheriting physical property over the long term, which in the case of Bitcoin, does not exist. Geopolitical tensions across the world also determine the type of assets one would be allowed to carry forward across jurisdictions. He explained:

“Bitcoin represents a property that you can acquire in small pieces that you can carry with you anywhere you go. You can give to your children’s children’s children’s children. And in 250 years, maybe your family still owns the property.”

According to Saylor, only royalties such as King Charles III have the liberty to pass down their wealth without worrying about being taxed away “unless it’s Bitcoin.” The entrepreneur reiterated that the Bitcoin network has not been hacked for over 13 years and is currently “the most secure network in the world.”

On an end note, Saylor emphasized the regular upgrades being made on the Bitcoin network to make it faster and more secure, along with innovations around layer-2 and layer-3 applications.

Related: Possession of Bitcoin still legal in China despite the ban, lawyer says

Bloomberg analyst Mike McGlone recently opined that Bitcoin is a “wild card” that is well-positioned to outperform stocks as traditional finance inches toward a recession.

McGlone took it to social media platforms, including LinkedIn and Twitter, to state:

“Bitcoin is a wild card that’s more ripe to outperform when stocks bottom, but transitioning to be more like gold and bonds.”

As Cointelegraph reported, the analysis notes that while Bitcoin would follow a similar trend to treasury bonds and gold, Ether (ETH) “may have a higher correlation with stocks.”

40%+ Ethereum PoS nodes are controlled by two addresses says Santiment data

Data released hours after the Merge prompted concerns about the alleged centralization of PoS.

Analysis from Santiment indicates that 46.15% of Ethereum’s PoS nodes are controlled by only two addresses.

Hours after the Merge, the first address has validated about 188 blocks or 28.97% of the nodes, and the second has validated 16.18%, or 105 blocks. On Twitter, the data became a controversial topic as users debated about the impact of the Merge on centralization for the largest network in the world.

Ahead of the Merge, the blockchain analytics platform Nansen released a report showing five entities holding 64% of all staked Ether, with Coinbase, Kraken, and Binance accounting for nearly 30% of staked ETH. Reports also showed that the majority of 4,653 active Ethereum nodes are in the hands of centralized web service providers like Amazon Web Services (AWS).

“Since the successful completion of the merge, the majority of the blocks – somewhere around 40% or more – have been built by two addresses belonging to Lido and Coinbase. It isn’t ideal to see more than 40% of blocks being settled by two providers, particularly one that is a centralized service provider (Coinbase)”, explained Ryan Rasmussen, Crypto Research Analyst at Bitwise. He added:

PoS is often believed to lead to centralization since it favors those with a higher token supply over those with lower amounts. As an example, the new consensus mechanism in the Ethereum blockchain relies on validators to verify transactions, not miners. To run a validator and be rewarded, participants must stake 32 ETH, which is equivalent to roughly $48,225 at press time.

PoS supporters, however, argue that the mechanism is more secure and eco-friendly than PoW. Ethereum co-founder Vitalik Buterin has predicted that the transition would not only bring down the energy consumption by around 95% but also help scale the network, with the transaction processing expected to get on par with centralized payment processors, features that are expected to take place in the second half of 2023.

40%+ Ethereum PoS nodes are controlled by 2 addresses says Santiment data

Data released hours after the Merge prompted concerns about the alleged centralization of PoS.

Analysis from Santiment indicates that 46.15% of Ethereum’s PoS nodes are controlled by only two addresses.

Hours after the Merge, the first address has validated about 188 blocks or 28.97% of the nodes, and the second has validated 16.18%, or 105 blocks. On Twitter, the data became a controversial topic as users debated about the impact of the Merge on centralization for the largest network in the world.

Ahead of the Merge, the blockchain analytics platform Nansen released a report showing fiv entities holding 64% of all staked Ether, with Coinbase, Kraken and Binance accounting for nearly 30% of staked ETH. Reports also showed that the majority of 4,653 active Ethereum nodes are in the hands of centralized web service providers like Amazon Web Services (AWS).

“Since the successful completion of the Merge, the majority of the blocks — somewhere around 40% or more — have been built by two addresses belonging to Lido and Coinbase. It isn’t ideal to see more than 40% of blocks being settled by two providers, particularly one that is a centralized service provider (Coinbase),” explained Ryan Rasmussen, crypto research analyst at Bitwise. He 

PoS is often believed to lead to centralization since it favors those with a higher token supply over those with lower amounts. As an example, the new consensus mechanism in the Ethereum blockchain relies on validators — not miners — to verify transactions. To run a validator and be rewarded, participants must stake 32 ETH, which is equivalent to roughly $48,225 at press time.

PoS supporters, however, argue that the mechanism is more secure and eco-friendly than PoW. Ethereum co-founder Vitalik Buterin has predicted that the transition would not only bring down the energy consumption by around 95% but also help scale the network, with the transaction processing expected to get on par with centralized payment processors, features that are expected to take place in the second half of 2023.

Environmental groups want Bitcoin to follow Ethereum’s example in moving to proof-of-stake

Critics have suggested Bitcoin could not operate as the same decentralized currency without a consensus mechanism like proof-of-work.

Transitioning the Ethereum blockchain from proof-of-work to proof-of-stake has reduced its energy usage by more than 99% — and many climate activists have called for Bitcoin to follow suit. 

In a Thursday notice following the Merge, the United States-based Environmental Working Group, or EWG, announced it would be starting a $1-million campaign aimed at urging Bitcoin (BTC) to go green as opposed to using an “outdated protocol” like PoW. The announcement came amid environmental activity group Greenpeace launching a petition directly at Fidelity Investments to facilitate the transition to PoS.

“Other cryptocurrency protocols have operated on efficient consensus mechanisms for years,” said Michael Brune, director of the EWG campaign. “Bitcoin has become the outlier, defiantly refusing to accept its climate responsibility.”

Speaking to Cointelegraph, EWG senior vice president of government affairs Scott Faber suggested the Merge event was generally “good for the climate” in reducing the energy requirements for the Ethereum blockchain. He cited a September report from the White House Office of Science and Technology Policy that concluded that cryptocurrencies — specifically noting PoW staking — significantly contributed to energy usage and greenhouse gas emissions, using more power in the United States than that for home computers.

“The Merge proves that changing the code is possible,” said Faber. “The Merge proves that digital assets that rely on proof-of-work can change to proof-of-stake and use far less electricity […] We’re hopeful that the Bitcoin community will follow Ethereum’s lead.”

Faber added that he would support any efforts by the White House to set energy standards affecting crypto miners, saying regulators “should not stand by and hope for the best” but needed to take action “quickly” given the climate crisis:

“We’re agnostic. We support cryptocurrency. We’re not opposed to digital assets, but we are concerned about the rising electricity use associated with assets that rely on proof-of-work, and the climate pollution that is inevitably the result of more and more electricity use.”

Some industry leaders have pushed back against moving the Bitcoin blockchain to PoS, citing reasons like security, the impact on the network’s decentralization and how coins would be treated by U.S. regulators. In a Wednesday blog post, MicroStrategy co-founder Michael Saylor claimed PoW was the “only proven technique for creating a digital commodity” like Bitcoin and suggested the total global energy usage of the cryptocurrency was a “rounding error” that was “neither the problem nor the solution” to solving the climate crisis.

“Regulators and legal experts have noted on many occasions that Proof-of-Stake networks are likely securities, not commodities, and we can expect them to be treated as such over time,” said Saylor. “PoS Crypto Securities may be appropriate for certain applications, but they are not suitable to serve as global, open, fair money or a global open settlement network. Therefore, it makes no sense to compare Proof of Stake networks to Bitcoin.”

Bitcoin mining platform Sazmining CEO William Szamosszegi told Cointelegraph in May:

“The fundamental mistake that […] critics of Bitcoin’s energy consumption make is that they judge Bitcoin by its ‘ingredients,’ rather than its value proposition […] We ought to judge a novel invention by the degree to which it solves a problem in society. PoW enables sound money and a decentralized currency backed by real-world energy. PoS can not possibly achieve this.”

Related: Environmental groups urge US government to take action on crypto miners

Many U.S. lawmakers have targeted major Bitcoin miners, with members of the House Energy and Commerce Committee requesting in August that mining firms provide information including the energy consumption of their facilities, energy sources and what percentage came from renewables. At the state level, New York has proposed imposing a two-year moratorium on PoW mining, legislation that would also prohibit the renewal of licenses to existing companies unless they were operating on 100% renewable energy.

F2Pool, Poolin to start Ethereum PoW mining after ETHW mainnet launch

Together, ETHW mining pools already make up more mining capacity in terms of block share than Ethermine, which opted to shut down mining operations.

Despite Ethereum’s historic transition to a proof-of-stake (PoS) consensus mechanism, mining pools are increasingly signing up for mining on the upcoming proof-of-work (PoW) version of Ethereum.

EthereumPoW, the community advocating for ETHPoW, or the PoW Ethereum version, has released a list of mining pools that are going to continue mining after the ETHW mainnet launch.

According to EthereumPoW, some major Ethereum mining pools are going to continue mining despite Ethereum’s switch to the eco-friendly PoS consensus mechanism.

At the time of writing, the list of ETHW mining pools composes a total of 19 various mining pools, including F2Pool, Poolin, AntPool, Nanopool, 2miners and EthwMine.

Interestingly, the list includes some Russia-linked pools, including Pool Moscow and BaikalMine, as well as Ukrainian ones, such as UA Pool. EthereumPoW noted that the list is growing as more pools are joining after the mainnet launch.

The mentioned ETHW mining pools apparently make up significant mining capacity. According to data from ETH.BTC.com, F2Pool is the second-largest Ethereum mining pool by blocks after Ethermine, with the year-to-date block share amounting to 15.7%.

Poolin is also a significant contributor, as several Poolin mining pools have a total block share of 8.7%. According to the data, 2miners, Nanopool and AntPool are also notable mining pools, with the annual block share standing at 5%, 3% and 1.5%, respectively.

Together, ETHW mining pools apparently make up more mining capacity in terms of block share than Ethermine, the world’s largest Ethereum mining pool, which mined more than 28% of all Ethereum blocks over the past year.

Unlike F2Pool and Poolin, Ethermine opted to terminate its Ethereum mining pool services due to Ethereum switching on PoS, officially announcing a withdrawal-only mode on Wednesday. Instead, the company has launched a new Ethereum staking service in line with the PoS Ethereum vision of the Ethereum Foundation.

F2Pool did not immediately respond to Cointelegraph’s request for comment. This article will be updated pending new information.

As previously reported by Cointelegraph, Ethereum’s PoS transition became a major issue for Ethereum mining firms as the Ethereum Merge was originally designed to eliminate PoW mining.

Related: ETHW Core to push on with Ethereum PoW fork 24 hours after Merge

The Merge is positioned as a major Ethereum upgrade, aiming to make the cryptocurrency greener and more eco-friendly. According to Ethereum researcher Justin Drake, the Ethereum Merge will reduce worldwide electricity consumption by 0.2%.

Due to Ethereum switching to PoS, Ethereum mining-related firms have been actively searching for solutions to continue mining. For example, cryptocurrency miner Hive Blockchain has been working to replace the mining of Ether (ETH) with other coins.