The upgrade pushes back the so-called "difficulty bomb," which could potentially slow or freeze mining on Ethereum, back to June 2022, Tim Beiko, the coordinator for Ethereum's protocol developers, tells CNBC Make It. By that time, developers hope to have transitioned Ethereum from a proof of work model for mining to a proof of stake model.
"After the transition, the 'bomb' will no longer exist on the network," Beiko says.
Arrow Glacier will not directly impact investors, but here's what to know about the "bomb" and its purpose.
To understand the "difficulty bomb," it's helpful to know about Ethereum 2.0, or Eth2, first.
Currently, Ethereum operates on a proof of work model, where miners must compete to solve complex puzzles in order to validate transactions. This model gets a lot of criticism due to its environmental impact, as it requires an extreme amount of computer power.
In 2022, Ethereum plans to shift to a proof of stake model, where users can only validate transactions according to how many coins they hold, rather than the energy-intensive mining rigs used now. This move is part of Eth2.
Eth2 will be hugely impactful, since it will change the Ethereum infrastructure and ultimately make mining obsolete.
Developers plan to introduce the "difficulty bomb" to motivate the transition to proof of stake, since it will make proof of work mining significantly more difficult. Delaying the "bomb" now will give developers more time to work on Eth2 before the shift.
Once implemented, Eth2 aims to make Ethereum more scalable, secure and sustainable. And proof of stake will not require the same amount of energy as proof of work, reducing the environmental impact of Ethereum by 99%, Beiko previously said.
This shift will also mean that Ethereum mining will no longer generate revenue.
Although it's impossible to predict the future price of any asset, some speculate that a successful shift to Eth2 may potentially impact the price of ether.
Nonetheless, there's a long way to go before Eth2.
Currently, ether is trading at around $4,126, according to Coin Metrics.
This story has been updated to reflect that Arrow Glacier went into effect on Dec. 9, and also show the price of ether.