Will Ethereum Mining Come to an End?

Ethereum could be on the brink of phasing out GPU-based mining, according to Ethereum co-founder Vitalik Buterin. The cryptocurrency is aiming to transition from its traditional mining model to a “proof of stake” algorithm in August, which would effectively eliminate mining altogether. Specialized miners are designed to mine a cryptocurrency with maximum efficiency, meaning they can generate more hash rate with less electricity. The impact of this centrality is evident in China's crypto mining ban; while Ethereum saw a decline of around 20%, Bitcoin lost nearly 50% of its total hashing power, showing that a large portion of Bitcoin mining was concentrated in certain parts of China.

There are other Proof of Work cryptocurrencies that can be mined with consumer hardware for profit; however, with many Ethereum miners searching for new coins to mine, these alternative options may no longer be profitable. The difficulty of mining on the Ethereum blockchain has been steadily increasing over the past year due to the growing number of GPUs actively mining ETH. The difficulty bomb will make mining Ethereum unprofitable, meaning miners will have to switch to a different currency or sell their graphics cards in favor of staking. The profitability of mining these altcoins varies, but they are usually 30-50% less profitable than mining Ethereum at any given time.

Burning so much energy into mining money from the Internet doesn't seem right to many people, so calls for cryptocurrencies to move to a more sustainable proof-of-stake algorithm have grown louder, and that's exactly what Ethereum is doing. After the merger takes place, mining difficulty will skyrocket due to the “difficulty bomb”, which is a mechanism designed to remove the incentive to mine Ethereum in favor of staking.

Shelly Riechman
Shelly Riechman

Infuriatingly humble music junkie. Award-winning student. Wannabe zombie aficionado. Hipster-friendly troublemaker. Social media enthusiast.