Another Crypto Exchange Signals Support for Miner-Led Ethereum Hard Fork

16 August 2022

in Mining

Reading Time: 4 mins read

As Ethereum’s much-anticipated move to proof of stake finally approaches, crypto exchanges are weighing whether or not to support a growing effort to resist the transition.

Today, another exchange has decided the move may be worth it.

Singapore-based cryptocurrency exchange Bitrue today announced that it will support a token linked to ETHW—the proof-of-work version of Ethereum that “merge resistors” will attempt to create by forking the Ethereum blockchain at the time of the merge.

The Ethereum merge, now expected to take place on or around September 15, refers to a protocol update that will combine the Ethereum mainnet with the proof-of-stake beacon chain—the final step in completing the network’s transition away from proof of work. That shift also marks the end of mining on Ethereum, which ETH miners aren’t too happy about, hence the growing calls for a hard fork that maintains the status quo.

Via a swap and IOU mechanism, Bitrue will make an ETHW token available to all current ETH holders on its platform. The trading platform, which according to data from CoinGecko ranks 20th among crypto exchanges throughout the world and accounts for more than $1.5 billion in 24-hour trading volume, will also create a token representing the new proof-of-stake version of ETH that is to exist if and when the merge takes place later next month.

Both tokens will be made available in advance of the merge; if the hard fork planned by merge resistors is unsuccessful, and ETHW never materializes, all ETHW on Bitrue’s platform will be automatically converted to post-merge, proof-of-stake ETH.

“Bitrue has always been about providing users with unmatched choice,” said Bitrue Chief Marketing Officer Adam O’Neill, in a statement to Decrypt. “[That] can be seen not only in the thousands of trading pairs available on the exchange right now, but also in our actions of providing unique and novel financial products.”

In recent weeks, other crypto exchanges—including Justin Sun’s Poloniex, Huobi, and BitMEX—have all launched ETHW-affiliated financial products. Binance, the world’s largest cryptocurrency exchange by volume, hasn’t ruled out supporting ETHW.

Other major crypto companies however, including Circle and Tether (providers of the two largest stablecoins, USDC and USDT, respectively) have stated their refusal to back ETHW in any form.

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The campaign to create ETHW began earlier this month at the behest of prominent Chinese crypto miner Chandler Guo. Guo and other crypto miners have until now enjoyed substantial earnings from mining Ethereum via an energy-intensive process that involves directing huge amounts of computer power at difficult-to-solve puzzles.

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The merge, though, will bring ETH mining to an end by transitioning Ethereum to a faster, more scalable proof-of-stake model, in which new ETH is created by pledging large amounts of pre-existing ETH.

Guo and other miners are hopeful that by hard forking, or splitting, the Ethereum blockchain come the merge, they will retain the ability to mine Ethereum (albeit a different form of the cryptocurrency).

Multiple experts previously told Decrypt that ETHW is highly unlikely to approach the market value of Ethereum, thereby substantially limiting the potential profitability of mining the novel cryptocurrency. To these experts, the only thing ETHW will likely be able to accomplish is undermining the merge’s legitimacy in the short term.