How Ethereum’s Proof-Of-Work Alternative Can Keep Miners Happy
On September 15, Ethereum completed the much-anticipated Merge, which makes the transition from a Proof of Work blockchain to a Proof of Stake one. The Merge is supposed to lower the Ethereum fees by 99% and make it a lot more environmentally friendly, as well as a bunch of other improvements.
But while this is great for Ethereum as a whole, the miners are the ones who are taking a blow. The transition from Proof of Work (PoW) to Proof of Stake (PoS) means that Ethereum cannot be mined anymore. And since nobody wants all their expensive equipment to collect dust on a shelf, they have to find an alternative.
That alternative may come in the form of a potential Ethereum PoW fork called ETHW. At this time, the chain is not live but some exchanges already allow spot trading on ETHW. One of those exchanges is FTX and the price of the coin is currently worth around $13, down from around $20.
The situation is a bit weird because people are trading a cryptocurrency that doesn’t have a working blockchain. According to FTX representatives “ETHW represents the potential canonical ETH Proof-of-Work (PoW) token. If FTX determines no such token has emerged, the token will settle to zero”. They continued by adding “ETHW is very volatile and may lose much of its value. Please take the time to research the risk involved in trading this product”.
People holding ETH on the FTX exchange have reported that they have received ETHW amounts equivalent to their ETH holdings. Exchanges such as ByBit and MEXC Global have also opened ETHW trading to their clients.
Technical Outlook – ETH/USD
Ethereum is currently trading at 1,470 against the US Dollar, having suffered two blows in recent days. Tuesday it was brought down by the higher than anticipated U.S. CPI, which gave a boost to the US Dollar, and Thursday it dropped once again after the Merge.
The first drop broke the 50-day Moving Average and the second one broke the support at $1,550, putting the bears in control. The RSI is pointing down, without being oversold, which suggests that the bearish move can continue.
A potential destination is the support level at $1,360 and the lower Bollinger Band but a move above $1,500 may bring in additional buyers who will stop the downside momentum. The bias in the short-term is bearish but The Merge is meant to make Ethereum better and more eco-friendly, which will eventually attract the attention of institutional investors.