The two factors of Ethereum's conversion to PoS and the suspension of 4G graphics card mining have made the doubt of "how long Ethereum can be mined" almost throughout the entire 2020 of graphics card miners. The prospect of Ethereum mining always seems to be re-asked with the latest news from "2.0". Today, the initial stage of Ethereum 2.0 will kick off. At the same time, mining on the PoW chain will remain the same. How should miners view the trend and how should they deploy it?
What we want to tell the miners first is to "take it easy and keep digging", and then through this article, we will analyze why Ethereum mining will maintain a relatively stable performance in the short term. We will also present the miners’ views and bring you graphics cards. The expectations of big players for the development of Ethereum mining.
Progress and layout
The "threat" from Ethereum 2.0 is still far away
How long can Ethereum be mined? Many friends of miners have been asking this question, and it seems that they have never found a clear answer. Not only that, every time the "2.0" progress update will bring a certain degree of anxiety, it is not necessary. Although the current time frame is relatively broad, we should make it clear that the key point that affects mining judgment is the development progress. In other words, "how long it can be mine" depends on "when the PoW chain and the PoS chain are merged".
Eth1 is the PoW chain that miners have been participating in, and Eth2 is the Ethereum 2.0 of the PoS consensus. After the merger of Eth1 and Eth2, PoW mining of Eth1 ceased, and the entire Ethereum network completed a consensus upgrade. The realization of the entire "consensus upgrade" process requires parallel development of Eth1 and Eth2, and each chain has its own schedule.
As you have heard frequently, Eth2 is divided into phase 0 (beacon chain, a PoS main chain), phase 1 (data fragmentation, 64 fragmentation chains), and phase 2 (transaction processing fragmentation). The expected time for the merger of the two chains to occur is stage 1.5. Eth2 has confirmed that it will arrive on December 1, when it will enter Phase 0 of the main network. Since Phase 0 is not yet available, any Ethereum economic activity will continue to run on Eth1, and the underlying consensus still depends entirely on PoW mining decisions.
Why is Eth1 still being developed? Not only for the normal existence of the entire Ethereum ecosystem, but also to support the various stages of Eth2. To achieve the merger of Eth1 and Eth2, which is a complete transition of existing economic activities, Eth1 needs to be able to communicate well with Eth2, such as the blockchain witness mechanism, changes to the current Ethereum virtual machine, and the data structure from Converting hexadecimal to binary and so on work. To incorporate Eth1 into Eth2, to make Eth1 from a consensus bottom layer to one of the shards closer to the user layer, to achieve remote calls between the two chains, a lot of development work is required.
The development of existing Eth1 is not a small project, and the new consensus architecture of Eth2 is even more difficult. Although the merger of Eth1 and Eth2 may have new alternatives, and the Ethereum Developers Conference has also stated not long ago that stage 2-this seemingly more distant stage, is temporarily shelved for development. It can be seen that no one can guarantee this market value of 60 billion A huge system that is above the US dollar and facing consensus changes can achieve simple and rapid changes.
Judging from the current planning time, Phase 1 may have to wait 1-2 years, and the "expected" postponement seems to be common in various blockchain projects. It may experience a longer waiting time before a highly scalable and fully usable PoS Ethereum.
The interests and positions of all parties involved in the conversion of consensus are still the parts that need to be overcome. In addition to the consideration of the mining revenue of miners, the more practical question is whether the Eth2 code can be safely undertaken for the existing DeFi projects with a locked warehouse value of more than 13 billion US dollars? The transition of wallets, exchanges, stablecoins and many infrastructures will take more time.
Before all this happens, Ethereum still needs PoW mining to support the good operation of this system.
Incentives and benefits
Considerable output value and relatively stable block reward
After the Ethereum consensus transition, how will mining revenue change? This is another puzzle about mining. How will earnings change? Simply put, it is "to be determined." No proposal has been widely discussed and approved.
Let's look at the block reward first.
The Ethereum protocol itself does not have an automatic production reduction mechanism like Bitcoin, but is implemented by deploying EIP (Ethereum Improvement Protocol) during the hard fork upgrade process. After two upgrades in Byzantium in October 2017 and Constantinople in February 2019, the production of the Ethereum block was reduced from 5 ETH to 3 ETH, and then from 3 ETH to the current 2 ETH. Therefore, whether Eth1 will make targeted production cuts after Eth2 goes online is also determined through proposals, discussions, and deployment.
The main purpose of Ethereum's previous block production reductions is to adjust supply and reduce inflation. As for production cuts intended to limit mining and transition to consensus, there are no widely discussed proposals. EIP2878 proposes to reduce the block reward from 3 ETH to 0.5 ETH. It has been discussed for a short time, but because the idea is too radical, it has received a lot of criticism, and the chance of implementation is quite slim. Even this radical proposal to reduce production by 75% is only related to benchmarking Bitcoin's inflation rate and increasing the purchasing power of Ethereum.
Will the gas fee income change?
Concerning the interests of miners, the community’s attention is more focused on the adjustment of gas fees. EIP1559, proposed by Vitalik as early as 2018, aims to make the gas fee market more predictable and reduce network congestion by setting the same basic fee rate for transactions and burning gas fees. Leaving aside the reduction in miners’ income, just regarding the feasibility of EIP1559 and whether it can really promote the development of the network, there are many objections or doubts in the community, and some serious economic analysis is also underway. Implementation will take time.
EIP1559, which drastically cuts gas fee income for miners, is not on the implementation list in the short term. The latest upgrade in the Ethereum plan, the Berlin upgrade, was postponed from August to January next year, and EIP1559 was not taken into consideration.
Ethereum block rewards and gas fees comparison chart Data source: Coinmetrics.io
Taking a step back, even if the gas fee of miners is greatly reduced, does it really affect the mining mentality of miners significantly? We know that the DeFi craze has led to a significant increase in the proportion of miners' income in fees. This situation of miners’ "really earning" is rare in many years of Ethereum mining, and mining revenue is still the main income. The source, not the gas fee.
What is the mining potential in the ETH "gold mine"?
From the above information, we can see that the two miners' income, block rewards and transaction gas fees, have no definite signs of imminent decrease. In the interval between consensus upgrades, the PoW consensus network of Ethereum, which is second only to Bitcoin in market value and mining output, still ranks first in graphics card computing power, and is the main position of graphics card miners.
PoW daily output and other data (November 30) Data source: F2Pool PoW rankings
According to the PoW ranking of F2Pool's website, the daily output of Ethereum exceeds 6.7 million US dollars, which is more than 10 times more than the third-ranked Litecoin. When answering questions about the supply of ETH tokens in a recent AMA, Vitalik said that in the next one to two years, the annual supply of ETH will be approximately 4.7 million ETH. This figure is consistent with the current annual supply. Even if the transaction gas fee is not included, the "post-Ethereum era" after stage 0 is still a tempting mining treasure.
The "coin price" is still the key point that determines the behavior of miners. The launch of Ethereum 2.0 has objectively promoted the long-term value of ETH, coupled with the entry of Grayscale and more institutions, grabbing mining, hoarding coins, and using graphics card computing power for "bargaining chips". A bullish secondary market is miners. The strong power of "plus size".
We already know that Ethereum still needs PoW, so whether it is block rewards or transaction fees, any changes in the network need to give enough incentives to miners to make the computing power strong enough to avoid attacks, so as to have an overall bullish outlook. The scale of market value allows the development of the network.
Miner's choice
Update equipment and stick to the base camp of Ethereum computing power
What attitude should the miner group adopt to respond to this Ethereum consensus conversion upgrade? F2Pool COO Dayu pointed out that Ethereum 2.0 is being carried out in stages, but the process of consensus conversion has been delayed. It is recommended that miners who have already participated in mining should continue to mine. If large-scale investment is made, the mining payback period can be calculated according to the situation. At present, it should be visible that PoW mining continues for two years.
Upgrade equipment. With the arrival of Eth2, the DAG files of Eth1 will be full 4G. For miners with 4GB graphics cards, it is time to upgrade their equipment. Unupgraded graphics cards are forced to withdraw from the Ethereum mining market. From the perspective of revenue, many miners can only choose some networks with relatively low revenue. And a large number of 4GB graphics card computing power flows into a smaller network, which will also increase the difficulty in a short time, reduce the income, and reduce the output of the equipment. And if you upgrade the equipment, you can continue to occupy the main position of graphics card mining.
Zhang Songqing, the co-founder of minerOS and a major graphics card miner, shared with F2Pool that he has completed the machine upgrade during this round of currency price increases, and replaced the old generation of graphics cards with better power consumption ratios and ability to resist risks. A new generation of stronger graphics cards.
Video card miner Zhang Zhenyu also mentioned when sharing with F2Pool that the graphics card equipment has been updated, which is basically 5700XT or equivalent. He believes that the mining equipment of Ethereum will be greatly improved in the first half of next year, and there will be new ASIC mining machines.
For users with existing equipment, changing the card looks more secure. The cost of continuing to "get on the car" is smaller, and the second-hand value can be increased when it is sold in the future. From the perspective of the upgrade method, some graphics cards such as P104 only need to refresh the firmware, and other graphics cards such as RX470, RX480, RX570, and RX580 need hardware upgrades. Replace the video memory particles. Replace 8 512MB video memory particles into 8 1GB of video memory particles is the "4G to 8G" that is often discussed by miners recently.
Diversified layout. Graphics card mining is different from professional mining machines. It has the characteristics of adapting to multiple networks and switching between different networks. This seems to affect miners' diversified layout thinking to some extent. "From a longer-term perspective, when the PoW chain is fully integrated into Ethereum 2.0, there is currently no network that can take over the computing power of Ethereum", Zhang Songqing said, "When updating hardware equipment, we will also consider lock-up. The PoS chain is used as a verification node, and it is currently diversifying its development beyond mining."
However, to move into a field that you are not familiar with, you must first learn enough information, and then steadily enter the game. Stakefish, a PoS technical facility service provider that currently maintains 8% of the genesis node, shared that although the rate of return of Ethereum 2.0 staking fluctuates between 2%-20% and can participate in the currency, there are many potential risks that need to be understood in advance, such as Software or network bugs, or being punished due to double-signatures, the uncertainty caused by the long lock-up time, and the risk of currency price fluctuations, etc. Therefore, it is quite reasonable to choose a service provider that has good performance before and can respond around the clock. Is important.
Ether mining, keep on boarding!
Understanding the development progress of the network, mining revenue, and the various choices miners face consensus upgrades, let us once again look at the Ethereum and graphics mining market from the current level of the hardware market.
Observing this year's graphics card market and future trends, Zhang Songqing believes that the short-term demand for graphics cards basically depends on the chip production capacity that can flow into the mining field. Judging from the rise in currency prices, the increase in computing power has not fully kept up. "The willingness of miners to increase computing power is still very strong, mainly due to the shipments of AMD and NVIDIA, and the computing power will not increase much before the end of the year." He believes that because graphics card manufacturers are still relatively cautious about mining, Miners can only obtain graphics cards on the market, which can restrict the excessive concentration of computing power to a certain extent. "But in general, there are more graphics card miners with more than 10,000 graphics cards this year, and there will be more and more computing power predators in the next year."
Regarding Ethereum's computing power, Zhang Zhenyu is optimistic about the overall upward trend of computing power. He believes that "next year will be a magnificent year for Ethereum mining". He believes that the path of Ethereum PoW cannot be changed in the short term. "It must be It can be digged for at least three years or even longer.” Not only that, “some of the new ASIC mining machines from well-known mining machine manufacturers have entered the stage of tape-out production.” Due to the expectation that the scale of computing power will continue to rise, While fully reflecting the popularity of Ethereum's PoW mining, it will also make competition more intense.
Generally speaking, we see that although the Ethereum 2.0 phase 0 mainnet will be launched, the atmosphere of continued mining and hoarding of coins is still high. Whether it is the improvement of Eth1 or the changes of Eth2, when it comes to applications, expansion, and future trends, people's eyes and topics are still focused on "Ethereum", the world's largest smart contract network, which is also supporting the continuous growth of computing power. Value engine.