While Ethereum is finally ready to release its Ethereum 2.0 update at the end of this year, putting an end to a long streak of delays, the network will start moving towards a proof-of-stake model.
As a result, the network will abandon the working test consensus algorithm, leaving the Ether miners (ETH) with very few options. As their equipment becomes obsolete, they will be forced to start mining altcoins, or re-certify as Iq Option stakers. So what is the current state of ETH mining, and what exactly will happen to the industry as a result of the upcoming transition?
What is Ethereum?
GPU versus ASIC
The Ethereum consensus is currently based on the PoW system, which is similar to that of Bitcoin (BTC). Therefore, the mining process is almost identical for Ethereum, as the miners use their computer resources to earn rewards for each block they manage to complete.
However, there is still a big difference between these processes. While Bitcoin mining has become almost entirely dependent on ASICs – large, noisy machines designed specifically for cryptomining that are clustered primarily in regions with cheap electricity – the Ethereum PoW hashing algorithm, called Ethash, has been designed to favor GPU units issued by global chip manufacturers such as Nvidia and AMD. GPUs are much cheaper and more accessible than ASICs, as Thomas Heller, the global business manager of the F2Pool crypt mining pool, explained in a conversation with Cointelegraph:
„Because ASICs are highly specialized machines, when a new generation is launched, it is often a big technological leap. Therefore, its hash rate is much higher, and the energy efficiency is better than the previous generation. That means those manufacturers have spent a lot of money to research and develop it. Their machines are usually quite expensive, while GPUs are much more affordable.
Heller added that those who use GPU miners „have much more flexibility in what they can mine. For example, an Nvidia GeForce GTX 1080 Ti card – a popular choice – can mine more than 15 different currencies, while ASICs usually support only one currency.
However, the Ethereum network is not totally immune to ASIC miners, at least in its current state. In April 2018, Bitmain launched the Antminer E3, an ASIC produced specifically for Ethereum mining. Despite being a very successful model, with a hash rate of 180 megawatts per second and a power consumption of 800 watts, it has received mixed reactions from the Ethereum community. A substantial portion of GPU team owners appear to have suffered loss of profit once the ASICs were connected, while some were even forced to switch to different networks.
„It’s in the white paper that ETH will be resistant to ASIC. I hope this Whitepaper represents something“ was one of the main comments in an r/EtherMining thread about the E3 Antminer at the time it was announced. „800 usd for 180mh only,“ argued a different Reddit user. „Hard bifurcation or Ethereum dies.“
Some Ethereum users even suggested that Bitmain’s mining device may lead to greater centralization and therefore increase the possibility of a 51% attack. Soon after, a group of developers proposed the „programmatic working test,“ or ProgPoW, an extension of the current Ethereum algorithm, Ethash, designed to make GPUs more competitive, thus promoting decentralization.
According to a March paper, co-authored by Kristy-Leigh Minehanes, one of the creators of ProgPoW, about 40% of the Ethereum hash rate is generated by Bitmain’s ASICs. Alejandro De La Torre, vice-president of Poolin – the sixth largest mining group at ETH – confirmed to Cointelegraph that „GPU mining continues to be dominant“ for the Ethereum network, adding
„Currently, the benefits of ETH mining are not high, and the management threshold and cost of GPU devices are higher than those of Asic devices. However, compared to Asic devices, GPU devices are more flexible as they can switch to other currencies with different algorithms.
The ProgPoW has not yet been integrated into the Ethereum, and it is not clear when it will finally occur, given that in March, the main developers of the Ethereum were d