Vitalik Buterin and the Ethereum Foundation have been heralding Ethereum's merge to proof of stake since the protocol was embryonic. But developers are finally testing the merge on Ropsten, Ethereum's oldest test network, so it's starting to look like Ethereum 2.0 could launch before the end of the year.
Ethereum 2.0's lanuch could come as soon as autumn. But Ethereum developers have said ETH 2.0 is coming SOON™️ for years. Many, for example, thought that the merge would take place in 2021.
So where does that leave us for a potential activation in 2022, and what happens to Ethereum mining if the merge does come this year? Let's take a look at what the Ethereum developers are saying, where market makers are placing their money, and see what the rumor mill says about Ethereum mining in a post-PoW world.
The Merge, Ethereum 2.0, and the Buterin's Big Gambit
A quick primer on what Ethereum 2.0 is, and how it would change Ethereum. (This is the abridged, abridged version of what Ethereum 2.0 and proof of stake is on a very rudimentary level. For a more in-depth understanding, please consult Delphi Digital's extensive report on Ethereum 2.0).
Currently, Ethereum operates using the same proof-of-work system as Bitcoin: miners mine blocks, order transactions into these blocks, and receive ETH as a reward. But PoW has always been a stepping stone to the Ethereum development team. Vitalik Buterin and the Ethereum co-founders have framed proof-of-stake as a major capstone for Ethereum's development since the beginning, one that would further distinguish it from Bitcoin by moving away from mining entirely.
In a proof of stake system, instead of miners using ASICs/GPUs to maintain the blockchain, "stakers" lock up ETH in a special staking node to earn the right to process transactions and generate new blocks.
In 2020, Ethereum developers took a step closer to the PoS dream by releasing the Ethereum Beacon Chain. This chain (which is essentially just a smart contract in this form) is the bridge between PoW Ethereum and PoS Ethereum; users can deposit 32 ETH into the Beacon Chain in order to earn a spot as a validator for the ETH 2.0 ecosystem. (The bridge is one-way, so once you stake your ETH, you can't unstake it).
Taking another step toward Ethereum 2.0, Ethereum developers will begin an attempt to migrate Ropsten--Etheruem's oldest testnet--to proof of stake on June 8, 2022. If this test merge goes well, the Ethereum mainnet isn't too far behind, Ethereum developers say.
"This is expected around June 8-9, 2022 on Ropsten and later this year for the Ethereum mainnet," reads a blog post about Ropensten's merge to proof of stake.
When Will ETH Merge to Proof of Stake and Ethereum 2.0?
After developers execute the merge on Ropensten (assuming it works), the merge on the Ethereum mainnet won't be far behind--the only question is, how far behind?
Ethereum developers and avid followers are arguably the most confident they've ever been. Some of the crypto scene's more vocal analysts have been placing bets (with a tungsten cube as the prize) on whether a successful merge will happen in 2022.
Outside of Twitter, the prediction markets are pointing toward a 2022 merge, as well. (Prediction markets were weeks ahead of the 2020 election results--and tend to be reliable, leading indicators of outcomes--so we'll see if they're as valuable here and if the current bets hold up).
So far, Polymarket is the only place offering Ethereum 2.0 prediction markets, and total participation and liquidity are pretty low (the largest contract only has $272k TOTAL volume).
Still, the majority of betters on Polymarket agree that the merge will take place this year:
September, 2022: Market makers are pricing in 27% odds that the Ethereum 2.0 merge occurs this September ($344k total volume).
October 2022: Market makers are pricing in 64% odds that the Ethereum 2.0 merge occurs this October ($285k total volume).
January, 2023: Market makers are pricing in 90% odds that the Ethereum 2.0 launch occurs next January ($23k total volume).
What Happens to ETH Mining When Ethereum Moves to Proof of Stake?
The 1 million ETH question: what happens to Ethereum mining when Ethereum 2.0 launches and Ethereum goes full-on proof of stake?
Ethereum miners won't go away when Ethereum 2.0 launches. They will point their hashrate to any GPU compatible pools available, so it's really just a matter of pools feeling out which coins miners want to mine.
We won't know which chains in particular ETH miners will migrate to, but rumors plucked from the grapevine have it that Ethereum Classic will pick up most of the slack, though Ravencoin and other altcoins will also be popular. It's highly likely that many Ethereum mining pools migrate to Ethereum Classic; in fact, the Ethereum classic developer team has been encouraging DeFi developers to port their apps to the original Ethereum chain.
Hashrate Index Newsletter
Join the newsletter to receive the latest updates in your inbox.