What’s happening with Ethereum mining?

On August 5, 2021, a London hard fork took place on the Ethereum network, which introduced a commission burning mechanism. ETH miners were afraid of the event, as it should, in theory, cut off their earnings.

Although in the end it turned out the opposite: income increased, but along with this, other problems arose.

The specialists of the 2Miners mining pool share their thoughts in a simple and understandable language. The text is written primarily for those who have turned on the farms, they work, and the money is dripping. Here we do not use the complex concepts of «gas», «gvey» and so on.

However, professional miners can also learn a lot from this material.

Gas price in the Ethereum network. Problems with payments (transfers)

At the beginning of August, the Ethereum network underwent an update, thanks to which part of the ETH coins, which previously went to miners, began to be burned – that is, they simply disappear forever from the network. Another change is that pools can no longer take any transactions into their blocks as they please. Previously, pools could make payments to their miners and pay a minimum commission at the same time, but now this is not possible. The pool could put payouts to miners in its blocks for free.

Already several times we have discussed in the blog how these changes affected the income of miners, and in our Telegram chat this is discussed every day.

In a nutshell:

  1. Miners started earning more. Despite the drop in income in ETH coins, the cryptocurrency rate has grown decently, as a result of which the total return in dollar terms has grown.
  2. Pool payments are now paid by miners.

Ethereum miners’ daily profitability

The issue of payments turned out to be more complicated than everyone thought. Pool has to take care of all the miners together, and each pulls in his direction – just like the Swan, Cancer and Pike from the fable. Some want payments as quickly as possible for any money, others are ready to wait, just not to pay a large commission.

The task would seem easy for them, but not everything is so simple. The pool has a single wallet. All work with the Ethereum network is done through it. The pool receives a reward for it, and pays the miners from it. The Ethereum network works in such a way that transfers from one wallet can only be made in a strict order “one after another” – and nothing else.

What are we all leading to? The pool cannot allow its miners to choose the size of the commission upon payment. Let’s say Vasya is one of those who do not want to overpay: he set the size of the commission below the baseboard and waits until the Ether network calms down and the price of transfers falls. Waiting for an hour, two, a day, a week. All other miners of the pool are waiting with Vasya . Until Vasina’s payout number 3 goes away, the pool cannot send any other payout, that is, numbers 4, 5, 6, and so on.

Where it leads? In the best case, the rest of the miners will say “Well, fuck you, Vasya” and suffer, in the worst case, they will simply leave the pool forever. We, of course, do not want to allow this, so we have to look for a balance in the cost of payments. Payments are now configured in such a way that they cost miners no more than $ 5 .

The most popular cryptocurrencies of the 2Miners pool

An important point to make is that if you use the addresses of the exchanges, the payouts can be more expensive. Some exchanges do not use ordinary addresses, but smart contract addresses, and to pay to such an address, you need more gas and, accordingly, a commission. We recommend using Ethereum direct addresses.

What should Vasya do, who is unhappy that the payment is so expensive? The only option at the moment is to adjust the size of the payout every time. Let’s say he has accumulated 0.021 ETH. In this case, you need to raise the amount of payments to a higher value, for example, 1 ETH, so that the payment does not go through. Next, wait until fees in the Ethereum network fall and remain low for a while. Then lower the payout amount to 0.02 ETH, that is, make it lower than the accumulated balance for the payout to go through.

Damn, how difficult, – Vasya will say. And he will be right. Who is to blame for this? We recommend blaming the Ethereum developers in the first place. They broke a system that had worked for years. But that’s why they are developers, we hope that they know better.

What are we doing? At the moment, we are making a smart payout system that should meet the needs of all miners. It is difficult to determine the release date, but we hope to complete it within 1-2 months.

ETH Going To POS This Year?

“Oh, and I read that Ethereum mining will die by December”, “Oh, but they told me that POS is already ready”, “Oh, oh,” – we hear this every day. To tell you the truth, nobody knows when Ethereum mining will end. However, if you want to hear our opinion – it is below.

Ethereum has been moving to POS for years. More than one generation of newcomers has been scared by the scary stories about leaving mining. Returning to our fable, “things are still there”. No, of course, there is progress. But when the ending is unknown. Consider how much money AMD, Nvidia, and others are making that sell mining hardware. Is it really so easy and unconstrained for all of them to disconnect from the «feeding trough»? Doubtful.

Next: do not forget that the developers are going to launch some kind of mixture, a joint POS staking and mining system in the first place.

If you want a clear date, let’s repeat – we don’t have one. However, we believe that Ethereum mining will not end in 2022 .

So what does it mean I should buy video cards?

Ufff. This is a tricky question. The cryptocurrency world is too unpredictable. The rates are changing, the difficulty of mining is changing. However, again, we can give advice.

Ethereum mining is carried out on video cards. If now Ether in the world is mining, roughly, 30 million video cards. What can change in a year? Let’s say that all the old video cards that could mine are already mining. The capabilities of Nvidia and AMD are finite, they won’t be able to produce a billion new graphics cards a year. How much can they produce?

It’s hard to say, try looking for the statements of these companies. From what we found, Nvidia could produce about 40 million chips per quarter. How many of them can be used for mining? After all, there are still games, complex calculations – they are not alive by mining alone.

Take a look at the Ethereum difficulty graph. If the price of Ether does not fall, then it looks like the difficulty may double in the next year.

The difficulty of mining Ethereum for the year

Guessing the course is generally a thankless task. It’s up to you to decide.

Take the calculator 2CryptoCalc and calculate the profitability, think about how you think it can change. Think about the residual value of the video card, what if mining ends or the profitability drops dramatically, how much can you sell it for? Think again thoroughly and make a decision. We definitely do not recommend starting mining on credit, with the last money, for a kidney, and so on.

What happens when Ethereum switches to POS?

POW and POS were discussed in detail in this article. In simple words: switching to POS means the end of mining ETH on video cards.

So what will happen to the miners? Yes, overall, nothing good. It is easy to calculate that no more than 10 percent of video cards are involved in the mining of other cryptocurrencies, and the remaining 90 percent are mining ETH. Imagine if ETH mining goes down. Everyone will rush to mine other currencies. Mining profitability will fall tenfold. Will mining be profitable in this case? Unlikely.

Although if you are asked, can 1 ETH be worth 30 thousand dollars? Or, say, 1 BTC at 500 thousand? Really? If real, then maybe it will come out with mining. If the entire cryptocurrency grows strongly, then mining will still remain profitable, even after the transition of ETH to POS.

We often hear theories that when all ETH miners switch to coins such as RVN or ERGO or ETC, their price will rise. We believe that this is a misconception. There is no connection here. The fact that a coin is mined by 10 people or 20 thousand people does not change its value at all.

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