With the Ethereum Merge, the consensus mechanism in Ethereum was changed. This implies that from now on no more mining can be done on the Ethereum network. For a long time, Ethereum Mining was still considered very beneficial and many people made money with it. What are the Ethereum miners doing now and is Ethereum mining still worth it? Let’s take a look at it in more detail.
What is the Ethereum Merge?
The Ethereum Merge is the total transformation of the Proof-of-Work consensus mechanism to Proof-of-Stake in the Ethereum network. The beacon chain, on which Proof-of-Stake was first launched, was connected to the Ethereum mainnet. As a result, the whole Ethereum network has been operating on Proof-of-Stake since the merge.
The merge is probably the most crucial step when updating from Ethereum to Ethereum 2.0. With the introduction of Proof-of-Stake, the Ethereum network is much more efficient, cost-effective, and sustainable. The Ethereum merge finally took place on September 15 without any problems. In this article, we have summarized everything about the merge.
What are the consequences of the Ethereum merge?
As a result of the Ethereum merger, the network will become much more efficient in the long term. The energy consumption in the Ethereum network drops by 99.9%. Likewise, the transactions are getting faster and the network could become much more sustainable in the future. The Ethereum Merge is now bringing the whole network ahead massively.
The Ethereum miners in particular see the merge a little more negatively. In the past, mining made exceptionally good money on the Ethereum network. As Bitcoin mining has become increasingly unprofitable in recent years, Ethereum mining has been more beneficial, especially for smaller miners.
What were the Ethereum miners doing before the merge?
Mining in the Ethereum network was very profitable for a long time. In exchange for supplying computing power, miners obtained rewards in the form of ether tokens when they validated transactions. Ethereum mining was a very profitable alternative for many miners.
With the Ethereum merge and the complete switch to proof-of-stake, the situation is completely different now. More and more miners had to leave the Ethereum network. Above all, a migration to Ethereum Classic was very widespread in the weeks before the merge and also had the impact that the Ethereum Classic price witnessed a short-term massive price increase a few weeks before the merge.
The transformation to the new consensus mechanism led to massive criticism from the miners, as they had great authority over the validation of transactions through mining in the past and made good money with Ethereum mining. With the merger, these individuals have now lost massive power and a good source of income.
With Proof-of-Stake, the people supplying large amounts of tokens for staking have the best chance of validating transactions. In the rarest of cases, these are also the big Ethereum miners before the transformation.
What is the future of Ethereum miners?
In the coming months and years, there could be an additional migration of Ethereum miners. But other solutions are also being discussed in the mining industry. With the transformation to Ethereum, a huge source of income for the industry, but also individual miners, will fade. The miners have the following alternatives:
- Migration to other networks
- Selling material and switching to staking
- Provision of computing power to other areas
Migration to other networks
The most obvious solution is probably migrating to other networks. The miners can no longer mine on Ethereum, but they are already moving to mine Ravencoin. Also, probably the biggest beneficiary is Ethereum Classic. This network arose from a hard fork of the Ethereum network and is an “old version” of the original Ethereum.
Ethereum Classic continues to run on proof-of-work, making it the easiest alternative for Ethereum miners. The hash rate has increased massively with Ethereum Classic. Miners could also find a home in this network in the long term.
Selling material and switching to staking
A second option for Ethereum miners is to accept the new Ethereum conditions and switch to Proof-of-Stake. To achieve the same profits as mining, companies, and individuals need massive amounts of ether tokens.
A sale of mining material could equip them to obtain the necessary capital to acquire Ether tokens and thus be among the winners in staking. Particularly now in the bear market, buying ether tokens is extremely worthwhile given the low prices.
Provision of computing power to other areas
The third solution for Ethereum miners is to allocate computing power to other areas to keep profits relatively stable. A big mining company called Hut 8 has already stated that these resources can be delivered “in the fields of artificial intelligence, machine learning or VFX rendering”.
The miners who have already established themselves broadly in recent months and years and could therefore incur lower losses can profit here. Eventually, however, these solutions are more complex to implement for smaller miners.
Is Ethereum mining time over?
The small miner has had little to smile about in recent years. Bitcoin mining is getting harder and harder, and with every halving event, the rewards for every bitcoin mined are split. Ethereum mining was a good alternative in recent years.
After the Ethereum Merge, Bitcoin and alternatives like Ethereum Classic are the only ways to make money from mining. The other thing to note here is that the EthereumPoW is the original Ethereum blockchain powered by the Proof of Work mechanism. Ethereum POW (ETHW) is a new coin that is split after the transformation to Proof-of-Stake.
EthereumPoW FAQs — Read me 1sthttps://t.co/LiUc7oVRNc#ethpow #ethereumpow #ethw $ethw #pow #eth #ethereum— EthereumPoW (ETHW) Official #ETHW #ETHPoW (@EthereumPoW) September 23, 2022
EthereumPoW positions itself as “the original Proof of Work Ethereum, developed and operated by the community.”. The preliminary objective of the Ethereum POW (ETHW) is to build an ecosystem that current ASIC miners can still be able to mine and utilize as an income source. Many ETHW supporters believe that the ETHW fork has no endurable fate and that utilizing the network may be scary due to insufficient growth and testing. You can find more about this in this article.
The difficulty in the Bitcoin network is now so high that almost only big mining farms are thriving. Thus, the time of mining for the small players is almost coming to an end.
For most retail investors, staking now seems to be the best option that can generate returns for years to come. With the rising prices in the next few years, this could be a profitable source of income.
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