If you are a cryptocurrency trader, you have probably heard of Ethereum (ETH-USD) upgrade known as Merge. It has received a lot of attention in the financial media – as much as its relative currency Ethereum Classic (ETC-USD) is often ignored. However, this is a mistake, as miners switching to Ethereum Classic could trigger a massive upward movement in price.
Here is an analogy to consider. Ethereum Classic is to Ethereum what silver is to gold: often dismissed as the cheaper and less important little brother. However, a lower price can often mean too much price movement.
In other words, ETC can amplify ETH movements, which should attract volatility-tolerant traders. Additionally, Merge has a side effect that will likely put some people out of work – at least until they start trading Ethereum Classic.
Ethereum merger will force miners to migrate
In order to make predictions about the merger, we must first understand it. So here are the basics.
The merger, which took place on September 15, is defined as “upgrading the original proof-of-work mechanism to proof-of-stake”. So transactions are done instead of ETH through mining activity between competing miners (proof of work), transactions will be validated by blockchain stakeholders (proof of stake).
Here’s the good news. According to Ethereum developers, the transition from Proof of Work to Proof of Stake will reduce energy consumption by about 99%.
And here’s the bad news. Chandler Guo, an Ethereum miner, expects that 90% of miners will be with proof of work will go bankrupt. No doubt at least some will take their mining skills and equipment elsewhere.
Ethereum Classic will benefit from the mining exodus
Do you see where I’m going with this? These miners aren’t going to go quietly bankrupt. Certainly, InvestorPlace contributor Brenden Rearick observes the exodus already underway: “Obviously they’re miners it starts to move ETC mining in response to the coming death of ETH mining.”
Why is this “obvious”? The answer, as usual, lies in the data. Ethereum Classic’s hashrate (a measure of network transaction processing power) has reportedly recently. exceeded 48.6 terahas per second. This represents a whopping 133% increase over the July hashrate.
Remember that miners have a lot of influence in the crypto community. If they flock to ETC, there could be a huge wave of investor interest.
Suddenly, Ethereum-obsessed pundits in the financial press might start freaking out over Ethereum Classic. Next thing you know, the announcers are exalted ETC Price Predictions and retail investors jump into trading.
What you can do now
Like silver to Ethereum gold, Ethereum Classic can amplify price movements and generate quick wealth for risk-tolerant traders. After all, it’s the often-overlooked assets that will sometimes produce the most impressive gains.
If miners switch to ETC, it could set off a chain reaction and fuel a veritable whirlwind of investor interest. So, you can bet on a big migration of miners before the proverbial train leaves the station.
On the day of publication David Moadel did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer and are the subject of InvestorPlace.com Publishing Guidelines.