Ethereum Merge Could Shine Light on Chinese Mining Influence, Says VC
Ethereum’s Merge may reveal whether Chinese miners still have an influence on the crypto industry, said Matthew Graham, CEO of Beijing-based crypto investment firm Sino Global Capital.
“It will be telling about how much market power Chinese OG miners still have,” Graham said during an appearance on CoinDesk TV’s “First Mover” on Wednesday.
Graham added that a large portion of Chinese miners, whether based abroad or in China, are “still heavily involved” in mining.
Read more: Ethereum Merge Explained: What Investors Should Know About the Shift to Proof-of-Stake
In May 2021, Chinese government officials banned bitcoin (BTC) mining. However, as CoinDesk previously reported, the country’s mining industry is very much alive.
Graham said it will also “be very telling to see how much influence [miners] still have on our industry” when it comes to Ethereum, the second-biggest blockchain after Bitcoin, and its long-expected changeover this week.
The Merge is the blockchain’s transition from a proof-of-work (PoW) consensus mechanism to a faster and less energy-hungry proof-of-stake (PoS) protocol. The change is expected to take place during the early hours of Thursday, Sept. 15.
Read more: Ethereum Proof-of-Work Fork Timing Posted
While some miners are expected to support a version of the current proof-of-work mechanism through a hard fork after the Merge, Graham said sees “no rationale for why that project should exist.”
“It doesn’t really make sense to me, but it will be telling in that one specific way,” Graham said, referring to Chinese miner Chandler Guo. Guo said he planned to fork Ethereum to maintain a proof-of-work version. Guo is hoping to attract the Ethereum miners the new PoS blockchain will leave behind because the new system will not require a miner's computing power to validate transactions on the chain.
Graham called the Merge a “seminal moment” in “the history of our industry,” and should be appreciated despite vigorous competition within the industry.
“It's an enormous credit to Vitalik [Buterin, Ethereum’s co-founder] and all the developers and everyone in the Ethereum community,” Graham said.
Read more: Ethereum’s Transition to PoS Could Push PoW by the ‘Wayside’, Ethereum Co-Founder Says