Ethereum...let’s talk about ETH baby, let’s talk about proof of stake! Let’s talk about
all the good things and the bad things that may be! Yeah today is about Ethereum, but not just
ethereum….the next ethereum 1.0..who is going to take over gpu mining when it moves to proof
of stake!? Well, find out as we dive into the rabbit hole...because it’s time for Chico Crypto!!
Well Ethereum and Bitcoin are proving themselves against the naysayers, who don’t see the value in
decentralization and only want speed, cheap transactions, and GAINS! What do I mean!?
The Solana network was basically down all day 2 days ago, and the blockchain
was shut down by a small and centralized group of whale VC validators! They should
probably change this on their website now….Decentralized and unstoppable! To
centralized and we will shut it down when things start to fall apart!
Now both Bitcoin and Ethereum are based on proof of work consensus,
and in their current forms are decentralized. Not one group can decide to shutdown the blockchain,
that would need to be voted and singalled by the network of miners and nodes on each network.
There couldn’t just be a quick plug pulled, like what happened with Solana!
Proof of Work with an appropriate hashrate has proven itself to be the most reliable consensus
mechanism, which is truly decentralized. Bitcoin has chosen so far to stick with
the time-tested proof of work, but Ethereum has decided to switch. They are moving to proof of
stake due to it’s scaling limitations, and possibly by the end of this year!
The beacon chain is Ethereum’s proof of stake blockchain, which has been running
in parallel to the Ethereum proof of work blockchain since December of last year!
It’s the most robust proof of stake network out there, with over 236 thousand validator
nodes….although it’s in its most basic form, no smart contracts...it’s just running the
proof of stake consensus and paying out Ether rewards to the validator stakers.
But by the end of the year, the beacon chain becomes smart as the full transition to proof
of stake from proof of work happens! This has been termed the Merge, and this is also when EIP 3554
is implemented, the difficulty bomb, which makes mining on Ethereum obsolete, it cuts the rewards
to zero & according to Nethermind, this is all hopefully happening in December of this year!
So this is great for the validators waiting in line, as they will be not only getting
staking rewards, but transaction fees that the miners have been reaping
in lately! As we can see from cryptofees.com, the average over the past 7 days is over 36
million dollars. Each day, on average 36 million dollars in fees alone
are going to the miners. This is not including their mining rewards. December these millions
in fees are being reverted to the proof of stake validators, plus the staking rewards…
But that means the miners get
nothing...they get booted to the curb with the Merge and difficulty bomb!
That is a lot of power, as the Ethereum hashrate is hitting
all time highs recently! It crashed during the China mining FUD and lies, in June,
but has surpassed that level, and as of yesterday was over 715 thousand Gigahashes of mining power
or 715 Terahashes!! To put that in perspective, Ethereum’s main fork, Ethereum classic only
has just over 24 Terahashes...or just 3.3 percent of Ethereum’s proof of work chain!
But many will argue that there is a play with Ethereum classic here! Including myself in the
past….The argument is a lot of this mining power is going to migrate from Ethereum
to Ethereum classic once the merge happens! The miners and their power need a place to go!!
And it seems like it would just make sense for the miners to go to the classic
fork...not much adjustments would need to be done, as they use similar algos!
Buttt...hold up. Ethereum is majority mined using GPUs, graphic processing units.
Ethereum has worked it’s but off since inception, restructuring and redeveloping ETHhash to make
its ASIC resistant... rejecting hashes from ASIC miners. Although within the last year,
Ethereum knew it was moving to proof of stake, so they didn’t fight ASICs anymore and 4 have been
developed. As seen from ASICminervalue.com3 from Innosilicon, and 1 from Bitmain!
So these will likely move over to an ETHhash blockchain like Ethereum classic as they have
to...they were built to specifically mine that algo. But the majority of the hashpower is GPUs,
and GPUS are flexible, they can use their power to mine other algorithms!
So where are the miners going to go!? Well luckily there is a great website, called whattomine.com &
it shows you the most profitable proof of work chains for GPUs! We can ignore all the
Nicehash ones, as that is just a powerbroker aka middleman for different algos. But #1 of course is
Ethereum...the 2nd most profitable is Ravencoin, 3rd is Ethereum classic, 4th is quarkchain, 5th
is beam, 6th is ergo, 7th is Metaverse ETP, 8th is vertcoin, and we will stop at 9, and that’s Zano.
Miners usually don’t discriminate, or hold emotional grudges against blockchains...they
are about one thing and one thing only. They are about profitability!
So does that mean, they will all jump over to the 2nd most profitable…Ravencoin!?
No, not at all. Some will, but many won’t. Coindesk actually put out an article on this
in July of this year titled “Valid Points: The Fate of Ethereum Miners When There’s Nothing Left
to Mine” and in the article they said “Michael D. Carter, the host of cryptocurrency mining YouTube
channel BitsBeTrippin, told CoinDesk in a phone interview that according to his calculations,
if all Ethereum GPU miners were to move over to Ravencoin, the price of the coin
would have to appreciate roughly 10 times in order for miners to remain profitable. “
“To Carter’s mind, the more likely scenario post-Merge is that miners end up splitting their
computational energy, also called hashrate, across multiple different coins that support GPU mining
and stay in business by spreading out to several new blockchain networks.”
“You’re going to see network discovery and you’re going to get buzz around
other networks naturally because people are going to want to know:
Where are the miners going to be pointing their hashrate?
Is there anything as profitable? What’s the value propositions of these other networks?” Carter said
Now I would trust Micheal Carter, BitsBeTrippin, he is a large and very knowledgeable miner
who has been analyzing this for some time. Diving into the technical and financial details!
They are going to likely spread out among the top coins on whattomine!
But they do need volume and liquidity for the miners to unload, so coins like Metaverse ETP
and even old vertcoin might not see much as their liquidity and volume is drying up!!
So where do I see the GPU hashrate going! Where will be the GPUs miners' biggest new
home!? Bringing in most of the power? And the one that will most likely do the biggest
price increase...thus balancing out profitability for the miners!
It’s not ravencoin, as pulling out it’s hashrate
since the May crash...it still hasn’t recovered. Lower than it once was....
Ethereum classic, it will get some as the hashrate made a big jump in May,
and then a slight dip in June...but it still hasn’t surpassed the May high!
Who else out of those listed on whattomine!?
Well there is one blockchain, who already has more Terahashes of power than Ethereum classic,
and it’ hashrate has been exploding since May of this year. Which signals to me
some of the Ethereum miners and their GPUs have already been migrating. That is Ergo!
Since May it has jumped from about 2.5 Terahashes to peaking at 40 just a few days ago! But it has
dipped and is currently just above 32 terahashes! Still a very big push up in just a a few months!
Now I know some of you might say...Hey Tyler, this Ergo, connected to Emergo and Cardano!
The people behind Ergo are former IOHK devs! I know that...but this is mining,
miners are there for profitability...they don’t care about emotional grudges,
ethereum maximalism and the like...and when it comes to miner migration,
and price increases due to that….neither does Chico...I still hate cardano, and it’s
failure of a blockchain...but that doesn’t mean Ergo is going to take a lot of the hashpower…
Cheers! I'll see you next time!