The days of mining on the Ethereum network are numbered. The blockchain is converting its consensus algorithm to the energy-saving proof-of-stake process, and there will soon be no more use for miners and their graphics cards. Various scenarios could materialize after the transition, known as a merge, expected in September. From which gamers should also benefit.
Mining without Ethereum hardly profitable
Like Bitcoin, Ethereum is still secured using the proof-of-work process, in which new cryptocurrencies are “mined” using computing power. With the switch to Proof of Stake, however, mining at Ethereum will soon be history. And miners are sitting on a mountain of hardware.
Some could switch to other cryptocurrencies – but probably with significant profit losses. All cryptocurrencies mined with GPUs, minus Ether, have a market capitalization of $4.1 billion – just two percent of Ethereum. Ether accounts for 97 percent of daily mining revenue.
Switch to staking
This scenario is therefore “less likely”, as Butta, CMO at Bitfly, which operates the largest ether mining pool with Ethermine, explains to BTC-ECHO. “Since coins will not be able to absorb the hash rate and mining will not be profitable,” miners would have to look for more lucrative opportunities.
“Due to the high GPU prices in the secondary markets and the possibility of a sell-off, the most rational decision for miners would be to sell their hardware and start staking,” said Butta. With Ethermine Staking and Ethpool Bitfly, Bitfly has already set up staking pools “which were essentially intended to convert our current miners from PoW to PoS”.
How gamers benefit from it
If you look at the drop in the Ethereum hash rate, i.e. the total computing power fed into the network, and the price drop in graphics cards, this scenario already seems to be happening. Since peaking at over a peta hash per second in mid-May, the hash rate has fallen by over 19 percent. Many mining devices have probably already gone offline.Ethereum Hashrate | Quelle: Glassnode
On the other hand, the prices of popular graphics cards have dropped significantly. In April, the flagship model GeForce RTX 3090 Ti from MSI was on average 2,400 euros. Current price: 1,450 euros. With the cheaper alternatives (GeForce RTX 3080, 3070 and 3060, sometimes with, sometimes without Ti), the price drop was similarly dramatic.
If there is a change in consensus, more stocks could be thrown onto the market, and the prices of used graphics cards are likely to fall further. Good news for those who are among the main customers and had to pay a lot of money for graphics cards during the pandemic due to supply bottlenecks and the global chip shortage: gamers. Miners, on the other hand, have to reorient themselves, but they had enough time to do so.
Disclaimer: This article was previously published in July 2022. It has been updated accordingly for re-publication.
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