Cryptocurrency miners have shown growing interest in Ethereum Classic (ETC) as the Ethereum (ETH) blockchain is in the process of being upgraded, shifting from a more energy-intensive mining system to one that locks cryptocurrencies into computers for accreditation. validators – thereby abandoning miners who are still dedicated to the task. The process is known as “Merge” (or “Fusion”, in Portuguese).
Ethereum Classic is an offshoot, or fork, of Ethereum. Contrary to what will happen in September with the most famous version, aa Classic will not change its validation mechanism, which makes it potentially attractive to miners – the blockchain will keep conventional mining and could attract entrepreneurs who have invested heavily in computers to “produce ” Ethereum.
However, according to analysts at the Messari analysis house, Ethereum Classic has little long-term viability. In a report, senior analyst Tom Dunleavy writes that while the ETC price may rise in the days leading up to the Merger, the token is unlikely to see sustained growth.
Ethereum (ETH) mining currently accounts for 97% of graphics card mining revenue on the planet and has a daily revenue of $24 million, according to Messari – Bitcoin mining uses another type of hardware.
After the Merger, users will be able to validate ETH transactions by staking (depositing) the cryptocurrency, rather than performing energy-intensive calculations, rendering equipment used for Ethereum mining almost obsolete.
Miners will be forced to sell their equipment or switch to mining the Classic version, which currently accounts for 2% of the world’s graphics card mining revenue, generating around $700,000 in daily revenue, according to Messari.
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This significant gap in profitability shows that even if a “significant portion” of ETH miners migrate to ETC, mining difficulty will increase dramatically and leave many miners unprofitable.
Mining difficulty is an automatic adjustment performed by the blockchain algorithm so that data validation time remains balanced amid increased computing power dedicated to the task. If the difficulty suddenly increases, miners with weaker equipment fall behind and fail to get rewards.
Last week, the ETC token surged more than 30% after Bitcoin (BTC) mining pool AntPool invested $10 million towards the development and exploration of applications for Ethereum Classic.
However, Messari analysts assess that ETC has a history of short spikes in prices and that, therefore, its current rise is not representative of the network’s long-term growth.
According to the analysis house, Ethereum Classic has less than half the number of active addresses on the Cardano network (ADA), the fifth largest blockchain by market cap. The current level of development in the Classic version is still less than a tenth of that of Ethereum and Cardano, and ETC has not seen a significant change in transaction volume since 2018.
“Ultimately, prices must have some fundamental link to network usage and underlying economic activity,” Messari wrote. “Unfortunately, for ETC holders, the scenario is not the same in either case.”
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