Energy Mystery

Two identical perfectly insulated containers are connected by a narrow tube that has a control valve. Initially, all the liquid is in the left container up to a height h (average height of h/2). When the valve is opened, the liquid flows from the left container into the right one, the system finally coming to rest when the levels are h/2 in each container (average height of h/4). The initial gravitational potential energy of the liquid is mg(h/2).The final gravitational potential energy is (m/2)g(h/4) + (m/2)g(h/4) = mgh/4. Half of the initial gravitational potential energy has disappeared! Why?

A) There is no loss of gravitational potential energy. The derivation is flawed.

B) The gravitational potential energy was converted to kinetic energy.

C) The gravitational potential energy was lost as heat.

D) None of the above