Crypto You Can Mine From Home: Ethereum Classic

The price of Ethereum Classic (ETC) has risen by over 130% in the last month. These gains appear to have been driven by the upcoming transition of Ethereum (ETH) from proof-of-work to proof-of-stake.

What Is Ethereum Classic?

The main goal of the Ethereum Classic project was to ensure the survival of the original Ethereum blockchain after the decision was made in 2016 to fork the Ethereum chain to restore $60 million of ETH stolen in crypto’s now infamous DAO hack.

The move was controversial because it ran contrary to the ethos of Ethereum and most other cryptocurrencies at the time, that code was law, and decentralization meant nobody could step in and arbitrarily change the direction of a project.

Thus Ethereum Classic was born – providing a credible alternative for people who strongly disagreed with the DAO bailout and the direction taken by the Ethereum Foundation. Like Ethereum, it supports smart contracts and decentralized Applications (dApps). Its native token is ETC.

While ETC can be mined with ASIC machines, it can also still be mined on desktop machines, a rarity for larger blockchains. A full list of mining resources for Ethereum Classic can be found here.

What Is The Ethereum Merge?

The larger Ethereum network (ETH) is set to undergo its change in consensus model on September 19th as part of the Merge upgrade. On July 15, lead Ethereum developer Tim Beiko, released a timeline for the Merge upgrade with concrete dates for key events including the final launch date. Since that day the price of ETC has jumped by ~140%.

Ethereum’s founder Vitalik Buterin has acknowledged that many investors are piling into ETC as Ethereum moves towards its transition to Proof-of-Stake. During the recently concluded Etherem Community Conference in Paris, Buterin invited the ETH community to use ETC if they prefer PoW. He called it “a totally fine chain.”

Soon after the conference, Antpool, one of the largest cryptocurrency mining pools in the world, announced it had invested US$10 million to support developers on the ETC network. Antpool CEO Leon Lv said the investment was to “build the prosperity of ETC,” and increase the network’s “layer 2 scalability through premium scaling solutions,” while promoting leading ETC projects. That Antpool, a major proof-of-work mining pool is investing in ETC, signals that it is in a position to be a leading PoW option post ETH’s switch to PoS.

Within Ethereum Classic’s documentation there is a reference to the network’s commitment to remaining a Proof-of-Work network.

“Ethereum Classic has a long term commitment to Proof of Work, a tried and true consensus mechanism that provides a solid foundation on which to Build Unstoppable Applications.”

Additionally, the documentation suggests that Ethereum Classic is prepared to absorb any current PoW Ethereum miners looking for a new network after their current home switches to proof-of-stake.

“Mining Ethereum Classic is almost identical to mining Ethereum, and supports the same hardware and mining software. If you are a recently evicted Ethereum miner, Ethereum Classic loves its miners and welcomes you, and you can start mining ETC using your existing hardware by simply switching to a mining pool that supports Ethereum Classic.”

Since the 15th of July, alongside the price of ETC spiking, the hashrate of the Ethereum Classic blockchain has also shot up. The ETC network hit a new yearly high of 31.39 TH/s on August 3rd. This suggests that with the date of the Ethereum transition to proof-of-stake now confirmed, its rejected miners are making the switch to Ethereum Classic. Some of the hashrate rise may also be driven by new miners choosing to launch on ETC expecting that it will be a profitable chain to mine on. Source: 2miners.com

Messari Analyst Sami Kasab says that while some Ethereum GPU mining setups will be able to transition to mining a variety of alternative PoW networks after Ethereum switches to PoS, ASICs currently deployed to Ethereum will only be deployable to Ethereum Classic.

“Ethereum’s mining network is made up of two types of hardware: ASICs and GPUs. The problem with ASICs is that they can’t be repurposed for different applications besides mining ETH. Ethereum Classic is the only other PoW coin that can be mined with an ETH ASIC, as its hashing algorithm is compatible with ETH’s algorithm.”

While it is difficult to determine what portion of ETH is mined using ASICs, estimates on reddit range between 20%-40%, with the rest of the hashrate coming from GPU miners.

The hashrate of the Ethereum network is currently 916.70 TH/s. Ethereum Classic bulls will hope that some of the Ethereum hash power will be exported to their network.Source: 2miners.com

There is a possibility that there will be a new forked PoW chain that will function as the new home for displaced Ethereum miners. A survey run by OTC trading desk and market maker Galois Capital revealed that 33% of respondents believe that the Merge will create two parallel chains ETH1 (PoW) and ETH2 (PoS).

The recent ETC price bull has been driven by investors backing the chain to succeed in a post-merge Ethereum ecosystem. It appears likely that the hashrate of ETC will rise post-Merge and ETH switching to PoS because newly dispatched miners will switch to it. A higher hashrate is generally a bullish indicator. It means a blockchain network is more difficult to disrupt with a 51% attack – something that Ethereum Classic has fallen victim to on more than one occasion.

For some investors, hashrate isn’t just a health metric of the network; it offers wider macro insight and is a measure of adoption. If the hashrate of Ethereum Classic continues to drive upwards in the coming months, there is a strong possibility that the price of its native token will rise alongside it.