If you’re a cryptocurrency trader, you’ve probably heard about the Ethereum (ETH-USD) upgrade known as the Merge. It has received a great deal of attention in the financial media — so much so that sibling currency Ethereum Classic (ETC-USD) is often ignored. That’s a mistake, though, as a migration of miners to Ethereum Classic could spark a huge price move to the upside.
Here’s an analogy to consider. Ethereum Classic is to Ethereum as silver is to gold: often dismissed as a cheaper and less important little brother. Yet, a lower price can often translate to outsized price moves.
In other words, ETC can magnify the moves of ETH, and this should entice volatility-tolerant traders. Besides, the Merge has a side effect that’s likely to put some people out of work — at least, until they ply their trade with Ethereum Classic.
The Ethereum Merge Will Force Miners to Migrate
To make predictions concerning the Merge, we first have to understand it. So, here are the basics.
The Merge, which took place on Sept. 15, is defined as the “upgrade from the original proof-of-work mechanism to proof-of-stake.” Thus, instead of ETH transactions being done through mining activity among competing miners (proof-of-work), the transactions will be validated by the blockchain’s stakeholders (proof-of-stake).
Here’s the good news. According to Ethereum’s developers, switching from proof-of-work to proof-of-stake will reduce energy consumption by roughly 99%.
And, here’s the bad news. Chandler Guo, an Ethereum miner, expects that 90% of proof-of-work miners will go bankrupt. Without a doubt, at least some of them will take their mining skills and equipment elsewhere.
Ethereum Classic Stands to Benefit from the Miner Exodus
Can you see where I’m going with this? Those miners won’t just quietly go bankrupt. Indeed, InvestorPlace contributor Brenden Rearick observes an exodus that’s already in progress: “Obviously, miners are starting to shift over to mining ETC in response to the coming death of ETH mining.”
What makes this “obvious”? The answer, as usual, lies within the data. Reportedly, Ethereum Classic’s hashrate (a measure of network transaction-processing power) recently exceeded 48.6 terahashes per second. This represents a whopping 133% increase compared to July’s hashrate.
Don’t forget, miners have a lot of clout in the crypto community. If they flock to ETC, a massive wave of investor interest could ensue.
Suddenly, the financial press pundits who obsessed over Ethereum might start jawboning over Ethereum Classic. The next thing you know, forecasters are pumping out lofty ETC price predictions and retail investors are jumping into the trade.
What You Can Do Now
Like silver to Ethereum’s gold, Ethereum Classic can magnify price moves and build fast wealth for risk-tolerant traders. After all, it’s the often-ignored assets that will sometimes post the most impressive gains.
If miners switch over to ETC, this could set off a chain reaction and catalyze a veritable maelstrom of investor interest. So, feel free to wager on the great miner migration, before the proverbial train leaves the station.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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