In just over a week from today, Ethereum’s Merge will leave ETH miners out of proof-of-work. As a likely result of speculation on the historic update, Ethereum Classic (ETC), the original network from which present Ethereum hard-forked, jumped by more than 14% over the week despite a slump today.

Ethereum Crosses Last Milestone Before the Merge

On September 6th, Ethereum developers activated the last update before the Merge is put into motion, scheduled to complete between September 15th to 20th. The freshly activated Bellatrix upgrade makes it possible for validators to communicate between the proof-of-work (PoW) and proof-of-stake (PoS) layers.

As the largest coding undertaking in the entire blockchain history, the Merge is all about combining these two layers. Currently, all Ethereum nodes are represented on both layers. Therefore, the Bellatrix upgrade will convey PoW data to PoS validators through API software.

In other words, Bellatrix enabled PoS validators to activate the Beacon Chain and start generating new data blocks. Beacon Chain has been the codename for the new Ethereum that will run as a PoS network. According to Ethernodes.org, a quarter of all Ethereum nodes are not ready to make the transition.

However, it is this 25.7% pool that generates much speculation. Where will the miners go, will they boost Ethereum Classic (ETC) or create a new Ethereum hard-fork, with ETHPOW tokens?

The Loss of PoW Profitability

According to on-chain data, Ethereum miner revenue generated $756.11 million in August alone. ETH miners are rewarded by generating uncle blocks, which are added to the mainchain as valid transaction blocks. Post-Merge, this business model will be canceled as miners will be replaced by validators.

While both miners and validators validate new transactions as valid, validators do so by voting instead of computing. That voting power is represented as the ETH stake instead of relying on energy-hungry computer hardware. It is now a question of where will that PoW hardware go.

Ethereum Classic (ETC) Boost

Ethereum miners could be used to bolster the Ethereum Classic (ETC) network. Without The DAO wallet hack in 2016, there would be no differentiation between ETH and ETC because the latter wouldn’t exist. The DAO was an ICO project launched on Ethereum for the purpose of accumulating funds and then allocating them to other ICOs.

In short, The DAO was a decentralized venture fund. Unfortunately, The DAO’s wallet contained a smart contract bug that was promptly exploited to the tune of 11 million ETH extracted. The only way to bail out over 18k investors was to reverse transactions by creating a hard-fork, which is the present Ethereum heading toward the Merge.

The leftover Ethereum Classic has equal smart contract functionality and performance as Ethereum but drastically reduced development and interest. Case in point, Ethereum Classic has 40.8k active addresses vs. Ethereum’s 718.6k for September.

But, because ETC has 2.7% of the market cap of Ethereum, even a fraction of Ethereum miners leaving can trigger large ETC price speculation. This is precisely what has been happening over the week. However, this boost is highly volatile and already on a downward trajectory.

Moreover, during the Merge upgrades, both developers and investors have expressed concerns that PoS will make Ethereum more prone to censorship. In August’s report, Kraken exchange concluded that a $100 billion worth PoS network could be overtaken by a $33 billion stake.

In the meantime, BTC.com has launched an ETC mining pool, which will have zero fees for three months.

Another Ethereum Hard Fork: ETHPOW

A fork of a fork, ETHPOW represents current Ethereum mining nodes that are not yet ready to sync with Beacon Chain. If these miners, represented by Chandler Guo, remain stubborn by the time Merge happens, the ETHPOW token will come into play.

According to Paradigm, a liquidity network for crypto derivatives, the ETHPOW token would trade at ~$18, which is roughly 1.5% of the ETH market cap. This is based on current futures interest. In other words, some ETH investors are not convinced that the Merge will go smoothly, so they are spot-buying ETH and selling futures against it.

If such a concern materializes in a major way, ETHPOW tokens should appreciate, representing the pre-Merge Ethereum. Additionally, current ETH holders should receive the free ETHPOW airdrop if they hold ETH in a compatible wallet. Yesterday, Bobby Ong of CoinGecko released a detailed guide on how to prepare for this airdrop and potentially profit.

At press time, ETHPOW IOUs are trading at $45, a -20% decrease from Monday’s $54 peak. Exposure to ETHPOW is available on Gate.io, Bitrue, MEXC, CoinW, and Phemex.

What About Miners Not into Either ETC or ETHPOW?

Another solution for canceled Ethereum miners is to employ their hardware for general-purpose networking. Specifically, for cloud computing, artificial intelligence (AI), or machine learning networks.

For example, Canadian Hive Blockchain (HIVE) announced this Tuesday they will harness their GPU power into:

• Scientific modeling of fluid dynamics.
• Tier 3 data center for cloud computing.
• Rendering for engineering applications.
• AI applications.

Likewise, the Canadian Hut 8 (HUT), announced on the same day they will pivot their GPU farms into “Artificial Intelligence, Machine Learning, or VFX rendering services to customers.” Whatever happens at the end of September 20th, the Merge is the biggest event in blockchain’s history.

While ETC/ETHPOW represents some short-term profit opportunity, it is equally bound to be short-lived. After all, post-Merge Ethereum is merely one of half a dozen PoS networks. Others like Avalanche, Algorand, or Solana are already performing at Ethereum’s future Surge level, and the mass DeFi adoption is still in its crib.

This article originally appeared on The Tokenist

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