Original Author: Old Yuppie
old yuppieold yuppie。
It has been four years since the Ethereum consensus mechanism officially planned to shift from Proof of Work (POW) to Proof of Stake (POS). As the first step of the ETH2.0 roadmap, the Ethereum Beacon Chain is committed to introducing a more secure and environmentally friendly proof-of-stake mechanism for the consensus layer of the Ethereum network. And it is planned to completely replace the energy-consuming and increasingly centralized proof of work after integration with ETH1.0.
In the Ethereum of the PoW stage, miners compete for bookkeeping rights through hash collisions and order transactions. After adopting the proof-of-stake Ethereum, people will randomly become verifiers by pledging Ethereum on a new chain (beacon chain), and order transactions in the network, thereby forming a new consensus form.
In addition, according to statistics, after the official integration of Ethereum, the overall energy consumption of the network will be reduced by 99%.
But this shift, in addition to some positive iterations, also means that traditional mining behavior will be unsustainable, which will undoubtedly have a huge impact on a large number of miners. Faced with this situation, miners have two options:
One is to sell mining equipment and buy ETH to adapt to the PoS Staking mechanism;
The second is to switch the mining machine to other networks that support GPU mining machines.
Nick Foster, a representative of U.S. mining equipment distributor Kaboomracks, said that most ETH miners will probably choose the latter.
first level title
ASICs and GPUs
There are two types of Ethereum mining machines: ASIC and GPU.
An ASIC (Application Specific Integrated Circuit) is computer hardware designed for a specific purpose, and the hashing algorithm for Ethereum is programmed into an Ethereum ASIC miner. GPU miners can solve complex PoW calculations and can also be used for more general applications. GPUs, for example, are often found in workstations and gaming computers to render images, encode video, or perform any other application that requires repetitive calculations.
Due to the distributed nature of the Ethereum mining industry, it is difficult to determine the exact ratio of ASIC and GPU miners on the network. BitPro CEO Michael D'Aria estimates that 90% of miners' mining activities are based on GPU mining machines, while the other 10% are based on ASIC mining machines. Michael Carte, the host of Bitsbetripping and focusing on encryption mining consulting business, has also publicly stated that he estimates that 20-30% of the miners on the network are mining based on ASIC mining machines.
The biggest problem with the Ethereum ASIC mining machine is that it can only be used for ETH mining, and it is almost incompatible with other applications. Ethereum Classic is the only other PoW cryptocurrency that can be mined with Ethereum ASICs because its hashing algorithm is compatible with that of ETH. But it also means that if mining Ethereum Classic is unprofitable, there will likely not be a resale market for ASIC miners, and they may even be shelved entirely after the Ethereum merger.
first level title
Reuse scheme of GPU mining machine
Messari, a well-known research institution, analyzed the reuse schemes of a large number of GPU mining machines and came up with the following relatively feasible schemes:
1. Mining other PoW Tokens
For some miners who have been mining for a living for a long time, they may have become accustomed to passively earning cryptocurrency from mining equipment or gaming computers.
With Ethereum abandoning the PoW mechanism, miners will undoubtedly want to know what other PoW Tokens can be mined. Relying on WhatToMine, a site that calculates mining returns, miners can determine how profitable cryptocurrencies are to mine based on the type of mining machine they specify and the cost of electricity.
And some large miners seem to be on a similar path. Sue Ennis, vice president of Hut 8, said that Hut 8 is considering mining other PoW Tokens, such as Ethereum Classic, after the merger of Ethereum. In addition, Hut 8 also plans to switch its GPU hash power to Luxor Mining Pool to mine Tokens including BTC, DASH, ZEC and SC, and all profits will be paid in Bitcoin.
But there is also a problem that cannot be ignored in this scheme - the market size of these PoW Tokens is far less than that of Ethereum.
As of June 9, the total market value of GPU mineable Tokens other than Ethereum was $4.1 billion, accounting for about 2% of the market value of Ethereum. Among the top seven GPU mineable Tokens by miners' income, Ethereum alone accounts for 97% of the total revenue of GPU miners. Ethereum Classic took second place with 1.9% of total GPU miner revenue. From these data, we can imagine how far the Token market size that can be mined by GPUs without Ethereum will shrink.
A common misconception in the mining world is that an increase in hash rate will lead to an increase in token price, when in fact the opposite is true. If ETH GPU miners pour into a certain PoW Token overnight, this will greatly increase the mining difficulty of this Token, resulting in a reduction in mining rewards. The end result is that most miners are not profitable. Only those miners with access to the cheapest energy will remain profitable, which will likely be institutions and large mining companies. So this means that only a small portion of ETH computing power can be migrated to other tokens that can be mined by GPUs.
The only way for other public chains that can mine Tokens through GPUs to receive Ethereum computing power is to increase the price of Tokens by several orders of magnitude. Given that the user activity on these public chains is much lower than that of Ethereum, the probability of their Token prices rising sharply is very small. In addition, apart from the miners themselves, most PoW public chains lack healthy community building.
Taking ETC as an example, even though Ethereum Classic (ETC) ranks second in GPU miner revenue, the network actually only has a total value locked of $120,000 and about 35,000 daily active addresses. In comparison, Ethereum has a total value locked of $50 billion and has more than 493,000 daily active addresses.
This discrepancy suggests that the dramatic rise in the price of ETC over the past two years has largely nothing to do with network fundamentals and is largely driven by speculation. Therefore, this means that miners will have a hard time finding alternative coins with real value and network usage.
Overall, the large-scale migration of miners to other PoW Tokens is hardly a sustainable solution. Any increase in the hash rate will increase the difficulty of mining and drive most miners out of the profitable range. Unless mining coin prices increase by several orders of magnitude, the network can only accommodate a fraction of Ethereum's hash rate, which is unlikely based on the current fundamentals of these projects.
2. Data centers that provide high-performance computing
After several years of development, the scale of Ethereum miners has grown from individual miners with only small mining machines to large mining companies operating thousands of mining machines and publicly listed. While small miners may transition easily following the Ethereum merger, for larger miners who have invested heavily in mining hardware, dedicated warehouses, and power-related infrastructure, deciding what to do next will be very difficult.
Hut 8 and HIVE Blockchain are two large publicly traded miners that have unveiled their post-merger strategies on Ethereum. Both Hut 8 and HIVE Blockchain have stated that they will attempt to transition into the high-performance computing industry. Both companies acquired data center businesses in order to reposition the business for transformation. These data centers are designed to provide an alternative to web services for cloud computing giants such as Amazon.
Hut 8 and HIVE Blockchain have invested heavily in high-performance GPU graphics cards for mining Ethereum, which allows them to repurpose GPU graphics cards to provide high-performance cloud computing services. Hub 8 describes its GPUs as "the Ferrari of GPUs," and they're one of NVIDIA's three key customers. Hut 8 is dedicated to projects in the Web3 industry, providing them with cloud hosting services such as blockchain infrastructure, game rendering, and NFT storage.
Demand for high-performance computing will continue to grow as gaming, artificial intelligence, and film animation flourish. This growth is an opportunity for large miners to gain substantial new revenue streams once the Ethereum merger happens.
3. Provide computing power for the Web3 protocol
The purpose of Web3 is to rebuild the Internet on an open, decentralized, and permissionless protocol. In order to achieve this, a distributed infrastructure needs to be established as the base layer. This includes building infrastructure for video streaming applications, rendering of 2D and 3D objects, and cloud servers. What these services have in common is that they rely on a distributed network of participants to provide GPU computing services.
Miners can redirect their GPU power to a handful of Web3 protocols, including:
Render Network: Distributed GPU computing power market, allowing users to contribute computing power for rendering. The network allows GPU miners to sell their rendering power to anyone in need, such as artists, designers, and researchers.
Livepeer Network: A decentralized network for video streaming that relies on miners to use GPUs to provide video transcoding services.
Akash Network: A decentralized cloud computing power market, providing a cooperation platform for providers with additional computing power and users seeking computing power. Akash aims to integrate the GPU market into its platform in the second quarter of 2022, enabling the network to handle data-intensive workloads such as machine learning, artificial intelligence, and cloud gaming.
These Web3 protocols will welcome GPU miners looking for a new home. It is worth noting that some protocols (such as Akash) impose an additional hardware capital threshold for miners to become hashrate providers. This solution is not only open to small miners, but also to large miners. In the future, Ennis stated that Hut 8 will open up its data center as a node operator/provider for Web3 protocols such as Render Network.
4. Sell the mining machine and pledge the mined ETH to participate in PoS
Summarize
Summarize
After the Ethereum mainnet is successfully merged, the PoW Token GPU mining market is likely to shrink rapidly. And as miners realize that mining other PoW Tokens will only keep a small number of miners with access to cheap energy profitable, most of the GPU mining machines will be resold in the secondary market.
And miners who are willing to invest time and money will be able to transition to high-performance data center operators or node providers of the Web3 computing power protocol, so both markets will have huge growth potential.
Original link
