Ethereum will soon do away with miners completely.
But those miners have millions
of dollars in specialized equipment.
There's an entire industry built around this.
Where do they go?
What happens next?
I put an entire research report together to find out.
And let me tell you, the answer isn't as simple as
just mining something else.
And this problem could breed a
So let's go ahead and jump in.
See, Ethereum is by far the most profitable
crypto to mine when it comes to GPU
and ASIC miners, I've seen stats that say as
much as 90% of all mining profits from
this type of miner come from Ethereum.
So what's the big deal here?
Two words:
Ethereum is getting ready to shift over to
proof-of-stake, which means miners are no longer needed
in this industry that generates $25 million a day
in fees, will completely come to a halt.
So when does this actually happen?
The Ethereum switch has become a bit of
a meme at this point because it seemed
like it's about to happen forever.
Here's an article from five years
ago talking about the switch.
So, of course, many people are like, yeah, I'll
believe the switch when I see it, Mr. Buterin.
But this time seems to be different.
Ethereum core developers and founders seem to be quite
confident that the switch will happen in 2022.
Some even say as early as August 2022.
So let's assume that that's true, that
the switch will happen this year.
What happens to all of those miners
making millions of dollars a day?
Well, they have opportunities as well as major risks.
Also, I need to let you know that this
research report was available to members on our membership site,
Finova way ahead of this video.
So if you want additional content, buy alerts and
trade signals like these from our members, you can
find a link to Finova in the description below.
It's an amazing site.
Now, first we need to understand hash rate.
Here is Ethereum's hash rate over time.
You can think of hash rate
or hash power as miner performance.
How many guesses a miner's computer can throw at
solving a hash problem in any given second?
This matters because miners who solve hash problems are
the ones who get paid because they earn the
right to mint a block of transactions.
So Ethereum's total hash rate is
all the mining power combined.
Ethereum's is insanely high compared to other chains.
Everything you do on Ethereum, buying NFT, trade
Shiba, facilitate a pump and dump scheme, and
this is all processed by miners.
But this poses an interesting problem.
Think of it like a lottery ticket in a bucket.
The fewer the total tickets in the lottery,
the higher the odds of you winning.
It's no different for hash rate.
And that's why a mining rig with
a higher hash power earns more money.
It simply owns more of the chain's total
hash power or total lottery tickets, if you
want to think about it that way.
Now, the big problem arises when
these miners go to other chains.
Those other chains just aren't ready
for the increased hash rate.
If the total hash rate goes up dramatically
in a small coin, then miners will actually
lose money running their mining rigs.
This is extremely bad for those ecosystems.
Ethereum can be mined either via
ASICs miners or GPU miners.
GPU miners have quite a few options when it
comes to other chains that they can move to.
ASICs miners, not so much.
ASICs are specifically built for the Ethereum algorithm.
So those rigs can really only easily
go to other chains like Ethereum Classic
that use the exact same algorithm.
Now, we don't know the exact distribution of GPU
and ASICs miners on Ethereum, but the consensus online
seems to be a split 50-50. So we're going to go with
that for our future calculations.
And you might be wondering, why can't
miners just switch over to Bitcoin?
Again, an algorithm issue.
Bitcoin uses SHA256, where Ethereum uses Et-Hash.
Okay, technically you could do it, but
it just wouldn't work very well.
Again, you want to be profitable
if you're running a mining rig.
Now, we have all of this hash power.
It needs to go somewhere after the merge.
So we have to do a ton of calculations to
see how other chains will actually handle this chaos.
I've broken this down into a five step process
finding alternatives, calculate hash rate power, translate that to
other chains, calculate future profitability, and then find out
what the future price would be for those other
cryptos in order for mining to remain as profitable
as it currently is.
Now, there's a ton of proof-of-work coins to
choose from, so for the sake of simplicity, we're going
to use the most promising five for our calculations.
Firo, Raven Coin Flux, Ethereum Classic and Ergo.
This is where things get a bit complicated.
There are at least 58 different
types of GPU mining cards.
So we need to find the distribution of
each type of card within the Ethereum network,
because of course, each one has different capabilities
and will have different effects on new networks.
That then allows us to do a bit of
math and find out how many cards of each
type there are out there mining Ethereum.
For example, there's 204,000 3070 cards.
Okay, now that we know each card, their capabilities, and
how many of them there are, we can see how
they'll perform mining other chains and the surprising effects.
Feel free to pause this if you're a bit
of a nerd, but this shows the hash rate
for each card on each different mining algorithm.
And now we can calculate what happens post merge.
We're going to assume 2.5% of Ethereum GPU cards
will move to Firo and Flux, 12.5% to RVN,
22.5% to Ergo, 15% of Ethereum GPU cards and 80% of
the Ethereum ASIC cards will move to Ethereum Classic.
25% of the Ethereum GPU cards will move
to coins that aren't on this list and
20% of GPU miners will just quit mining
altogether because it just doesn't make sense anymore.
- I hate this job.
I hate this goddamn job and I don't need it.
- This will result in a hash rate change
of between 600% and 1100% for these five coins.
Remember, that will dramatically reduce the profitability
to mine on those chains, but it
will create some other opportunities.
Here we can see how much individual miner
profitability will decrease on each of these five
new chains after the Ethereum merge, anywhere from
7% to a whopping 82% decrease in profitability.
We can then take those figures and find the
for each of these coins.
Basically, how high does the price have to go
for miners to be as profitable as they are now.
Again, there's a major oversupply issue
after the Ethereum merge, Flux would have to
increase 600%, RVN 1100%, Ergo 1600% to $41
a coin, Ethereum Classic 2000% and finally Firo,
8000% to break even with current mining profitability.
As you can see, this places a massive strain on miners .
And we can't be sure, but
potentially on these coins as well.
If thousands of miners come to a new coin, begin
mining it and immediately sell everything they mine, this will
put a ton of downwards pressure on those coins.
However, that is assuming a lot of actions.
Not all miners are just going to sell.
So where do the opportunities come in?
I see two.
First is identifying one of these
coins that you particularly like.
If one of these coins sees a ton of attention
and some name recognition as the go-to coin for miners
after the merge, this will mean a ton of visibility
and publicity, which could help push up the price.
Here you can see I put together some
on each of these five coins.
We have new active addresses, transactions per
active address and social engagement metrics.
Further, here's some data on development stats,
VC funding and token allocation to insiders.
Now, there is a secondary opportunity :
As we can see, mining profitability will absolutely go
down after the Ethereum merge, but eventually the market
will even out and become profitable again.
Despite that, many people will sell their GPUs right after the
merge, meaning that will be one of the best times ever
to pick up a used mining rig or GPU.
So you can wait for mining to be profitable again
buy GPUs and use that compute power for other things
that need it, or build up a ton of hash
power to make yourself a super competitive miner.
It's important to remember that the
world of crypto is insanely new.
We're still at the very beginning of this space and
will continue to see massive changes on a yearly basis.
But for every change, you can bet that there's someone out
there finding a way to make a ton of profit.
Whenever there's big changes, there is money made.
And all I'm saying is that person could be you.
Now, from here, I would like
to thank my faithful sponsor, FTX.
Without them, I would have one hell of a
time trying to afford to make these videos.
So consider checking them out.
They offer a huge selection of cryptos
and NFTs with insanely low transaction fees.
You'll find them linked in the description below.
I'd like to thank you so much for watching.
I'm Max Maher and I hope you have a profitable day!