crypto mining The cosmos is approaching a critical inflection point. There are currently two major proof-of-work coins, bitcoin and ethereum. Bitcoin consensus rules are immutable and historically unchangeable by some of the largest exchanges and miners in the region.
Ethereum is constantly changing and the biggest changes could come in the second quarter of 2022.
What does ETH 2.0 mean for cryptominers?
Ethereum’s proof-of-work consensus protocol is expected to move to proof-of-stake (PoS), meaning that video card miners will no longer be useful for adding blocks to the Ethereum blockchain.
However, the Ethereum community has been discussing this transition since 2016 and it has been delayed. At the Ethereum Core #124 developer meeting on October 15, a proposal to postpone the December 2021 “difficulty bomb” was discussed.
Given the special nature of Ethereum mining, we expect these miners to exit the market entirely.
The difficulty bomb quickly increases the difficulty of mining up to a certain block height, and this essentially freezes the chain and causes a hard fork. The difficulty bomb is now expected to happen around June 2022, and many in the community are hopeful that the move to proof of stake will eventually happen.
When this transition happens, it will be very disastrous for the miners who are currently mining Ethereum. These miners have to move their graphics cards to mine other coins that are profitable with their hardware, and these coins are significantly smaller than Ethereum and probably less profitable to mine. It is possible that if this changes to POS, as recently announced, the video card market will be filled with cheap used chips from miners.
For cryptominers, this means that Ethereum miners are at a very high risk of their machines becoming obsolete overnight. Their cash flow will immediately dry up and the resale value of their GPUs will drop significantly. Knowing this risk, most of the capital invested in crypto-mining goes to bitcoin mining.