Ethereum Classic’s hash rate falls by 46.16% on Sunday

The hash rate of Ethereum Classic fell by 46.16 percent to 164.75 terahash per second (TH/s) on Sunday. The market valuation of the blockchain also went down by 26.7 percent against the U.S. greenback.

The drop occurred ten days after the completion of the Merge, which changed the network’s proof-of-work (PoW) mechanism to the efficient proof-of-stake (PoS) one. Prior to the Merge, Ethereum Classic’s hash rate reached its all-time high at 306 TH/s, rising by 482.85 percent starting from September 12. Previously on September 6, its price peaked at $41.80 per unit.

Reports showed that a number of crypto miners remained at Ethereum's PoW-based networks like the Ethereum Classic after the Merge. There were also new networks launched post-Merge, including ETHW and ETHF. According to Sebastian Nill of AETERNAM, the mining community stayed on these networks due to the “possibility of hard fork.” These miners prefer to gain ETH through mining rather than buying.

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“Ethereum Classic is going to be just as effective as Ethereum was for miners. In the end, the community is going to pick ETC, not because of its rentability but for effectiveness for data processing,” Nill added.

ETHW had posted a hash rate of 79.52 TH/s when it launched after the Merge, but it went down to 45.97 TH/s on Sunday, or around 42.11 percent of its recorded rate on September 16. Despite seeing a hash rate drop, ETHW's price rose by 42 percent against the U.S. dollar by the end of last week.

Another Ethereum-based network that maintained the PoW mechanism is ETHF (Ethereum Fair). Upon launch, its hash rate was eight TH/s, but it reportedly went down to an unknown rate soon after. ETHF registered its tokens to several crypto exchanges upon launch, like ETHW.

Ethereum’s transition to PoS mechanism

Despite some miners remaining at Ethereum's PoW networks, the blockchain has stressed the importance of its switch to the PoS mechanism. Ethereum Foundation’s Skylar Weaver said that the Merge was a “necessary step” for the blockchain to offer more user-centric benefits.

“Other chains achieve lower gas fees and faster transaction speeds indeed by making tradeoffs: They sacrifice decentralization to have more scalability,” Weaver said.

"Folks can use Rollups today to have transactions with a fraction of the gas cost, faster, while still inheriting the security and decentralization benefits of Ethereum. That’s how we are scaling without taking shortcuts.”

In wake of the current instability in the market, Matt Weller of City Index also said that Ethereum was building a “safe” foundation to provide more perks for its users.

However, despite outpacing BTC in terms of growth, Ethereum experienced a price drop after the Merge. Data from September 22 showed that the ETH’s value had fallen by 17.3 percent in a week, placing the coin as one of the lowest performing crypto coins last week.

That said, the Merge earned Ethereum interest from U.S. regulators. U.S. Securities and Exchange Commission chief Gary Gensler said that the transition could cause the crypto asset to be considered a form of security because the staked cryptocurrencies could generate dividends.