The Merge signified a transition of the Ethereum blockchain from the Proof-of-Work (PoW) consensus mechanism to Proof-of-Stake (PoS).
This network upgrade helped Ethereum move closer to its goal of becoming more scalable, secure, and sustainable.
The Merge took place on September 15, 2022.
The Merge has been a long time coming, bringing with it apprehension from Ethereum’s mining community, as the switch to PoS did away with mining rewards and replaced it with staking, which requires less power and the use of energy-hungry crypto mining rigs.
At the time preceding The Merge, many Ethereum miners who had over time invested millions in the PoW mining infrastructure were deciding on whether to:
- Accept the move to the PoS consensus mechanism
- Hard-fork Ethereum into a completely new blockchain that still relies on PoW
- Switch entirely over to Ethereum Classic
- Shut down their mining operations
As The Merge has played out, it’s been very apparent what choices were made. Many former miners did in fact shut down their operations following the historic upgrade, with less than 1/3 of Ethereums hashing power migrating to Proof of Work chains after the upgrade.
Up to the actual date of The Merge, ETH miners dumped an estimated 17,000 ETH, which resulted in downward selling pressure causing ETH price to fall from above $1700 down to $1300.
ETH miners were expecting positive price action after The Merge, but when that didn’t materialize, they dumped their large positions in ETH and exited the ETH ecosystem completely.