What If Ethereum Hadn't Transitioned from PoW to PoS: A Game That Never Happened

Author: Hu Tao, ChainCatcher

On September 15, 2022, Ethereum completed the largest and riskiest technological upgrade in cryptocurrency history—"The Merge," officially transitioning from the Proof of Work (PoW) consensus mechanism to Proof of Stake (PoS). This upgrade not only reduced Ethereum's energy consumption by approximately 99.95%, but also fundamentally changed the issuance and network security mechanisms of ETH.

However, nearly four years have passed since this upgrade, which many viewed as a historic turning point for Ethereum, and discussions about whether it was worth happening have recently resurfaced.

The core idea is not complicated: What if Ethereum had not completed The Merge back then and instead continued along the PoW path until 2026?

In today's world, where GPU computing power has become a core strategic resource in the AI era, an imaginative counterfactual scenario is: Could the millions of GPUs originally used for ETH mining have been reorganized to form a global distributed computing network? Would PoW have allowed Ethereum to gain another strategic position in the AI era? And for ETH, would the continuous selling pressure from miners and higher issuance have become an unavoidable cost?

1. The Potential for a Global Distributed GPU Computing Network

If Ethereum had stuck with PoW, one of the most direct assets left would be the vast GPU computing infrastructure formed around mining rigs.

Unlike Bitcoin's highly specialized ASIC miners, Ethereum's historical GPU miners possess stronger general computing capabilities. Theoretically, if Ethereum continued to adopt PoW and gradually established computing power scheduling, task verification, and revenue distribution mechanisms at the protocol or ecosystem level, these GPUs could have the opportunity to evolve from mere devices ensuring network security to infrastructure for AI, rendering, and HPC tasks.

Jademont, co-founder of Waterdrip Capital, clearly stated on X that he has always believed that the transition from PoW to PoS was a severely overrated decision. It did reduce energy consumption, but the cost savings are almost negligible compared to the development opportunities lost as a result.

"If Ethereum had continued to evolve along the PoW path and pushed for the development of computing power infrastructure, it could have grown into the world's largest blockchain-based AI computing network, occupying a more important strategic position in the AI era. The shift to PoS, however, prematurely ended that possibility."

Crypto KOL Emm also stated: "If ETH had continued to use PoW, it might have one of the largest GPU computing pools in the world. Imagine if millions of ETH mining GPUs had not exited but instead connected to the AI computing market through the protocol; the Ethereum ecosystem could have formed a decentralized AI cloud powered by global miners, similar to a decentralized version of AWS GPU Cloud."

Logically, this is not far-fetched. Bitcoin's ASIC miners are highly specialized and difficult to repurpose; Ethereum's GPU miners, on the other hand, have general computing potential. If the protocol layer could design incentive mechanisms that allow miners to rent out computing power during block production or idle periods, or marketize computing power through side chains/application layers, Ethereum could establish a unique bridge between "blockchain security" and "AI infrastructure." The decentralized computing projects, rendering networks, and distributed training attempts we see today might have appeared earlier and on a larger scale within the Ethereum mainnet or its ecosystem.

Of course, real-world constraints also exist: the interests of miners and the needs of AI clients do not naturally align, and issues such as network latency, task scheduling, data privacy, and verification mechanisms need to be addressed. However, starting from the point of "having one of the largest GPU pools in the world" would indeed leave Ethereum with greater imaginative space in its AI strategy.

2. Direct Impact on Coin Price and Selling Pressure

From a purely supply-demand and price perspective, sticking to PoW is not without cost.

0xTodd, co-founder of Ebunker, stated that towards the end of PoW, Ethereum mined about 13,000 ETH daily. If calculated roughly at the common price of $2,000 at the time, the daily selling pressure amounted to approximately $26 million. After transitioning to PoS, the output plummeted to about 3,000 ETH, and the selling pressure dropped to about $6 million, only a quarter of what it was before.

This "massive reduction in output" is viewed by some as one of the true core motivations behind the Merge—the foundation was more concerned with reducing the influx of new coins into the hands of miners and mining rig manufacturers than with simply reducing electricity consumption (especially given the surplus hydropower and thermal power in Southwest and Northwest China at the time). The design of the difficulty bomb was also a "red button" planted as early as 2013-2014, intended to prevent inertia from allowing Ethereum to remain permanently on PoW.

Therefore, without the transition to PoS, Ethereum would have long endured higher inflation and selling pressure from miners. In a bull market, computing power and coin price might form positive feedback, making miners more willing to hold; in a bear market, it could exacerbate declines. In contrast, the lower issuance under PoS aligns more closely with the narrative of "digital gold" and is more likely to attract long-term capital and institutional staking. While price volatility may be higher, long-term deflationary expectations would also be weaker.

"Even now, there are still many smart individuals who believe that Ethereum's transition to PoS was the biggest blunder; just look at its big brother ETC. After the hard fork, ETC, which continued to use the PoW mechanism, saw its market cap drop from the top 20 before Ethereum's The Merge to now 64, a decline of over 80%." Crypto KOL yyy stated.

Although the gap between ETC and ETH in terms of ecosystem, developers, and brand is enormous and cannot be simply compared, it at least illustrates that merely relying on "continuing PoW" is not sufficient to guarantee better market performance.

3. Scalability, World Computer Narrative, and Technical Evolution Challenges

If GPUs and coin prices are potential advantages left by PoW, scalability may become its biggest structural constraint.

Ethereum has long aspired to be an open "world computer," and today's development direction has shifted from merely increasing L1 transaction throughput to a scalability system composed of L1, L2, and data availability. The ongoing advancements around Blob, Rollup, and subsequent protocol upgrades are essentially aimed at reducing the computational and data costs of the entire Ethereum ecosystem.

PoW is not absolutely incapable of achieving scalability, but its consensus mechanism imposes certain limitations on protocol design. PoW networks rely on competitive computing power to ensure security, and block propagation, block time, and on-chain state growth must consider the hardware thresholds and network conditions of miners. In contrast, PoS allows for tighter protocol-level collaboration among validator sets, finality, and data availability mechanisms, providing greater design space for Ethereum's further scalability.

More importantly, PoS reduces the real resource costs required for Ethereum to maintain security, allowing the protocol to allocate more resources to L2, data availability, and user experience.

The energy issue cannot be avoided either.

Even if PoW Ethereum could utilize a large amount of renewable energy or low-cost electricity in certain regions, its high energy consumption could still become a problem that institutions need to explain when adopting and in regulatory contexts. For public blockchains aiming to support stablecoins, RWA, and traditional financial assets, PoS is clearly more compatible with institutional considerations regarding energy, ESG, and compliance risks.

Thus, if PoW were to continue, Ethereum might retain a large GPU industry but could also face higher costs in terms of scalability efficiency, energy costs, and institutional adoption.

4. Conclusion: History Has No Ifs, But Hypotheses Can Reflect Reality

Ethereum's transition from PoW to PoS was both a proactive choice in technology and economics and a path predetermined by the "difficulty bomb" in its early design. It sacrificed the possibility of a certain distributed computing network in exchange for lower inflation, higher capital efficiency, and smoother scalability. The resurgence of today's discussions is due to AI making "computing power" itself a new strategic resource, and those GPUs that were eliminated back then happen to possess generality.

If Ethereum had not transitioned to PoS, it might indeed have had a large-scale distributed GPU network and gained a completely different development path after the rise of the AI computing market; ETH might also have had a stronger PoW "digital commodity" attribute.

But at the same time, higher issuance, miner selling pressure, scalability constraints, and energy and institutional adoption issues could also become ceilings for its long-term development.

Therefore, this counterfactual game is ultimately not about "which is more advanced, PoW or PoS," but rather about two completely different development paths:

Continuing with PoW, Ethereum might become a digital commodity network with smart contract capabilities; transitioning to PoS allows it to become a global open settlement and digital economic infrastructure.

The arrival of the AI era simply makes this already concluded choice interesting again—because the large number of GPUs that were eliminated back then have now become one of the world's most scarce computing resources.

History cannot be replayed, nor can it prove that another path would necessarily be better. But it can be determined that Ethereum's choice of PoS back then was not a simple "technical upgrade," but a long-term strategic bet on energy, security, capital efficiency, computing power, and future industrial direction.

The real question now is no longer "where did the GPUs of that time go," but whether Ethereum can leverage the path it has chosen to capture sufficiently large economic value in the development of AI, stablecoins, RWA, and global on-chain finance.