merge that is part of the so-called Ethereum 2.0 upgrade has been delayed until sometime late in 2022.
"It won't be in June, but probably in the few months after that," Tim Beiko, a developer at the Ethereum Foundation, said on Twitter yesterday. "No firm date yet, but we're definitely in the final chapter of PoW on Ethereum."
Earlier in the Twitter thread, Beiko had advised a user to stop investing in mining equipment. But why? It has everything to do with "The Merge".
What is the Ethereum merge?
The Ethereum merge is part of the massive Ethereum 2.0 upgrade that is being rolled out over a number of years. The merge is the most important part of the upgrade for many, as the Ethereum network switches from Proof-of-Work (PoW), to Proof-of-Stake (PoS)
in this phase.
PoW and PoS are both consensus algorithms. A consensus algorithm specifies how an agreement is reached on a blockchain
about new transactions coming in. Such a consensus algorithm is needed to keep out malicious transactions.
So Ethereum is changing its consensus algorithm, and that means a lot for the network. The PoW algorithm is generally a slightly more secure, but slower and much less durable algorithm. Ethereum is moving to PoS, so in principle, the network will be slightly less secure, but much faster, cheaper, and more importantly; more sustainable.
For coins that use the PoW algorithm (e.g. Bitcoin and Ethereum currently), mining equipment is needed to keep the network running. However, there are so many new people and businesses who want to mine Bitcoin, that it has become a very competitive market.
The person with the most computing power has a greater chance of successfully mining, which is why there are now entire buildings full of mining equipment that runs 24/7. As you can imagine, this costs buckets of energy. The PoS algorithm uses less than 1% of that energy, as it does not require any special equipment at all.
Because Ethereum mining will soon be a thing of the past, Beiko advised against investing in mining equipment.
Ethereum 2.0 delays
This is not the first time that there has been a delay in the rollout of Ethereum 2.0. In fact, the entire process has already been delayed, as the original plan called for the upgrade to be fully ready by 2022. However, Vitalin Buterik, the founder of Ethereum, indicated that they are now at about 50%. After the merge, it will be around 60%.
Earlier, for example, the London hard fork, aka EIP-1559 upgrade, was implemented. We are already seeing the positive effects of this on the network. The upgrade was intended to reduce transaction costs (which were often sky-high on Ethereum), and it certainly succeeded. So although the ETH2.0 upgrade has been slow, we are already seeing positive effects.