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. He stated that the cryptocurrency is aiming to transition from its traditional mining model to a “proof of stake” algorithm in August. Tim Beiko has advised Ethereum miners to stop buying new mining equipment, as the merger will reportedly eliminate mining altogether. The profitability of mining altcoins is usually 30-50% lower than mining Ethereum.

This can be seen in China's crypto mining ban; while Ethereum saw a decline of approximately 20%, Bitcoin lost nearly 50% of its total hashing power, showing that a large part of total Bitcoin mining came from certain regions of China. After the merger occurs, mining difficulty will skyrocket due to the “difficulty bomb”, which is a mechanism to eliminate the incentive to mine Ethereum in favor of staking. There are other Proof of Work cryptocurrencies that can be mined with consumer hardware for profit; however, with many Ethereum miners looking for new coins to mine, these alternative options may no longer be profitable. The difficulty of mining on the Ethereum blockchain has been increasing over the past year due to the steady increase in the total number of GPUs actively mining ETH.

The difficulty bomb will make mining Ethereum worthless, meaning that anyone mining ETH will have to transition to a different currency or sell their graphics cards in favor of staking. These miners are developed from the ground up to mine a cryptocurrency very efficiently, which means that they can produce more hash rate with less electricity.

Shelly Riechman
Shelly Riechman

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