Why has Ethereum Classic grown by 50% in 10 days and will continue to grow?

The price of Ethereum Classic has increased by 50% over the past two weeks. It is no exaggeration to say that the explosive trend started on March 17, when Ethereum developers announced the launch of a test merge of PoW and PoS.

According to the developers' plans, in 2022, the Ethereum blockchain will switch to the Proof-of-Stake (PoS) mining algorithm. This will mean the end of ETH mining using specialized equipment. Now, the number of tokens stored on a user’s account will play a key role.

Initially, the Ethereum blockchain used the Proof-of-Work (PoW) consensus algorithm. This is the dominant algorithm among the largest cryptocurrencies. It is used by Bitcoin, Ethereum, Litecoin, Dogecoin, Bitcoin Cash, and Monero. With this mechanism of network functioning, the creation and verification of new blocks are carried out by solving mathematical problems. This process requires huge computing power. It can be performed with the help of special equipment:

• processors
• video cards
• ASICS

The main disadvantage of Proof-of-Work is that it forces miners to buy expensive hardware and uses a lot of energy (which upsets Greta Thurnberg). Unlike the BTC blockchain, Ethereum developers have made this process more accessible because this network uses a slightly different hashing algorithm — Ethash. However, with the growing popularity of the Ethereum cryptocurrency, the complexity of its mining has increased significantly, and it also requires a lot of power.

Ethereum developers are aware of the problem with the mining complexity and plan to replace the consensus mechanism. Around the 3rd quarter of this year, the Ethereum blockchain will switch to the Proof-of-Stake (PoS) algorithm.

This is an alternative way to add a new block to the blockchain chain. When using it, there is no need for powerful hardware — no complex tasks need to be solved anymore. Any users, including those with ordinary PCs or smartphones, can participate in coin mining.

Despite the fact that the difficulties with the purchase of expensive equipment will disappear, a new problem will appear — the need to have a large amount of money for staking and mining, since when using PoS, those who hold a lot of coins have a better chance of mining a block. That is, the share of assets is used as proof (instead of solving problems). Accordingly, users now have a new goal: to get more Ether tokens to increase their chances of making a profit.

So why is Etherium Classic growing?

The merger of PoW and PoS will allow us to determine the exact timing of ETH 2.0, starting a countdown for miners and bringing the end of the Ether mining era closer.

Bloomberg analysts predict that large farms will not sell off graphics cards but will switch to mining Ethereum Classic. The team of this fork, unlike Ethereum, will continue to work on the PoW consensus.

The transition of miners to Ethereum Classic has already begun, as evidenced by the hashrate, which has grown by 20% since March 17, breaking the six-month drop in ETC computing power.

There is another reason: analysts believe that many smart contract developers may follow miners to Ethereum Classic if Ethereum 2.0 does not solve the problem of high fees (this problem is already being felt).

Does this mean that it is worth selling Buterin's ether? We don’t think so, since such problems do not affect the growth of the BTC price, but eco-defenders are increasingly attacking the PoW method. Time will tell.