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Ethereum is by far the most popular cryptocurrency for GPU miners. However, there is little time left for Ethereum in its proof-of-work state. It will move to proof of stake later this year when it merges with the beacon chain.
What will happen to GPU miners and where will hashing power end up? There are many options, but will any of them be profitable after a considerable increase in hashrate?
The Ethereum merger
The decline of the crypto markets has made even Ethereum mining unprofitable for many miners. However, after Ethereum goes to proof of stake, GPU miners will no longer be able to mine Ethereum. With prices falling, energy costs rising, and the merger date drawing ever closer, the hash rate of the Ethereum network has dropped dramatically.
A reduction in hashrate causes mining difficulty to decrease, which makes GPUs more efficient. However, the 10% decline has done nothing to cover the other factors driving the drop in Ethereum mining profitability.
This information suggests that miners are shutting down their machines as yields decline. Only miners paying less than $0.235kwh using the latest generation of GPUs can currently make a profit mining Ethereum. For example, a mining rig made up of AMD Vega64 cards, one of the most profitable GPUs during the 2021 bull run, now requires a power cost of less than $0.18kwh to be profitable.
So the question is, what are miners doing with their GPUs as they move away from Ethereum?
GPU mined POW altcoins
BitPro’s Mark d’Aria crunched the numbers regarding other altcoins and the future of GPU mining. He concluded that “GPU mining may have a renaissance, and we’re doing it all over again.” Miners cannot simply switch to another slightly less profitable coin due to the influx of hashing power that will come after proof-of-work on Ethereum is turned off. However, below is a list of the top proof-of-work cryptocurrency contenders and their hashrates.
ETH Hashrate: 1.14 PH/sERGO Hashrate 12.62 TH/sXMR Hashrate: 2.51 GH/sZEC Hashrate: 8.53 GH/sRVN Hashrate: 2.20 TH/sETC Hashrate: 18.85 TH/s
To understand how we calculate which of these coins could take up the mantle of king of GPU mining, we need to understand the following formula:
Price per Coin x Reward per Block x Daily Blocks = Total Daily Revenue.
d’Aria created the following table to highlight the daily earnings of the most popular proof-of-work coins.
Without an understanding of the total mining revenue of each coin, you might miss that “mining calculators don’t show you the relative hashing power and revenue of the various coins when they show you all these alternatives to ETH.” d’Aria explains the implications in an easy-to-understand manner,
“In [the] oversimplified base case scenario, nothing changes between now and merge. All cryptocurrency prices, total hash power and block rewards remain the same. On the day of the merger, all GPUs are diverted to other currencies. Now there are 10 million GPUs left to split roughly $775,000. Average revenue per GPU? $0.0775.“
Also, in a more positive bull case, d’Aria calculated that even if all cryptocurrency prices doubled and only half of miners continued, the average GPU income would still be just $0.30 per day. Ultimately, he claims that
“Realistically, there is no good outcome here for miners on merger day. A miracle needs to happen for things to stay the way they were. Winter is coming.”
The increase in distributed hashing power in the current ecosystem, at current prices, cannot realistically lead to profitable GPU mining for any cryptocurrency. However, not all can be lost. CryptoSlate spoke with Stefan Ristic of bitcoinminingsoftware.com, who brought up another possibility.
“The post-merger era will not be easy for miners, but I don’t think it will be that bad. First of all, I think the role of miners is quite neglected in these articles. When Bitcoin was not yet tradable, it was the miners who led the adoption… We cannot exclude the option that The Merge goes wrong and Ethereum goes back to PoW.”
However, GPU miners surely cannot trust the merger to go wrong to secure their future. Ristic used the history of Bitcoin to anticipate the increased adoption of another proof-of-work cryptocurrency.
“Miners are the strength of any PoW cryptocurrency, and if we see millions of miners starting to protect another cryptocurrency, this should logically increase the adoption of that cryptocurrency and that should also be reflected in the price.”
Supporting this thesis, Bryan Myint, senior advisory director at Republic Crypto, told CryptoSlate that “the market will come up with other ways to implement blockchain consensus and infrastructure support using PoW to address the gap.”
One such method was proposed by Stephen Ross, Principal Infrastructure Engineer at Republic Crypto, who said: “It is already possible to increase mining profitability by transcoding video on the Livepeer network at the same time Ethereum is being mined, and it is Other opportunities are likely to arise in the future.”
Profitability after the merger
Regardless of the math, post-merger GPU mining is still advocated by many. The mining company, Nicehash, suggested that “the move from Ethereum to PoS will not be the end of mining. There are still many interesting Proof-of-Work projects that miners can direct their hashing power to. However, the article says very little about the impact that the drop in the total hashing power of the Ethereum network will have on a new chain. Nicehash promoted Ravencoin, Flux, and Ergo as alternatives to Ethereum without considering d’Aria’s math.
d’Aria concluded his article by stating that GPU miners may have to wait a while before a profitable alternative emerges. It is important to note that BitPro buys and sells GPUs and therefore has a vested interest in GPU miners selling their rigs. However, the math doesn’t lie. GPU mining will have a very difficult time on merge day. Profitability will undoubtedly fall to potentially unsustainable levels. However, miners have been the staple of the crypto industry since 2009. Ristic made a very valid point in stating that the power of a decentralized network of miners is unparalleled.
If Ravencoin’s hashing power increases 500 times, it would be one of the safest assets in crypto. If the price increases by a similar multiple, Ravencoin could become the new Ethereum. The same is possible for all GPU minable coins, so keep an eye on the hash rate of the coins above. It could be a hugely bullish sign.
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This post GPU Mining Could Eventually Be Profitable After Ethereum Goes Proof-of-Stake
was published first on https://cryptoslate.com/gpu-mining-could-eventually-be-profitable-after-ethereum-moves-to-proof-of-stake/