The upcoming Ethereum merge will swap the community consensus system into “proof of stake.” Here’s why miners are apprehensive about it.
Ethereum Miners Made $18 Billion In 2021, More Than Bitcoin Miners
As per the newest weekly report from Arcane Research, ETH mining revenues totaled $18 billion in 2021, barely greater than Bitcoin miners’ $17 million earnings.
Even within the 12 months 2022 up to now, Ethereum miners have been main the race when it comes to revenues. Here is a chart that compares the mining revenues of the 2 largest cryptocurrencies available in the market for the previous few years:
It looks as if primarily based on the present fee, Bitcoin miners will finish the 12 months 2022 making about $10 billion | Source: Arcane Research's The Weekly Update - Week 30, 2022
As you may see within the above graph, the BTC mining revenues had been forward of ETH’s till the 12 months 2021, when the latter coin’s validator flew forward.
With latest revenues being so excessive within the billions, Ethereum miners have invested a big amount of cash into buying extra graphics playing cards to enhance their earnings.
However, quickly these revenues will immediately fade into nothing because the ETH transition to a proof-of-stake (PoS) mechanism is accomplished.
In the “proof-of-work” (PoW) consensus system, which the crypto at the moment makes use of, miners act as community validators and compete with one another by fixing computing puzzles.
PoS, alternatively, doesn’t contain any “miners.” Instead, right here any investor can develop into a validator by locking in a certain amount of cash into the community “staking” contract, and so they don’t require any substantial computing energy both.
These validators, referred to as the “stakers,” are randomly chosen to hash the following transaction into the chain. Though, stakers with bigger quantities staked get higher odds to be chosen.
The benefit of PoS over PoW is that it massively reduces the quantity of computing energy concerned in validating transactions. Because of this, it’s additionally a extra environment-friendly mechanism.
The upcoming Ethereum merge will full the swap to PoS, and that’s very worrying for the miners because it means they are going to be turned out of date.
There are hardly any choices left for these miners to show to as Bitcoin mining makes use of totally different chips than the GPUs ETH miners have and no different crypto is sufficiently big to fill the income hole of ETH.
Something miners can strive is to assist different GPU-mineable cash to develop. One such potential crypto is Ethereum Classic, which noticed a 155% uplift through the previous month. However, as it’s now, ETC’s mining revenues are simply 3% of ETH’s.
If shifting to a different crypto doesn’t work out, their solely selection left can be to dump their GPU stacks that they invested $15 billion on.
At the time of writing, Ethereum’s worth floats round $1.6k, up 20% previously week.
Looks like ETH has sharply rebounded | Source: ETHUSD on TradingView
Featured picture from Michael Förtsch on Unpsplash.com, charts from TradingView.com, Arcane Research