Has the Ethereum Merger Killed Cryptocurrency Mining For Good?

On September 15, 2022, the long-awaited Ethereum Merge finally took place. After using a proof-of-work consensus mechanism for a long time, the Ethereum blockchain has finally moved on to proof-of-stake, the same system used by other cryptocurrencies such as Cardano, Solana, and Polygon. This drastically reduced the energy consumption of Ethereum.

It also claimed another victim: cryptocurrency mining.

But is crypto mining dead as a result of the Merger? Or do Ethereum miners have a chance to mine other cryptocurrencies?

What Was Ethereum Mining And Why Did It Stop?

Pre-Merge, the two top blockchains, Bitcoin and Ethereum, were working on a proof-of-work mechanism. That meant people could mine — borrow computing power so the blockchain can verify transactions — in exchange for a reward. Each block mined rewards users with a certain amount of cryptocurrency – thousands of dollars per block (plus transaction fees). To make mining easier, some miners organized themselves into “pools” where they would pool computing power and divide the reward of each block, paying out rewards depending on how much computing power each miner contributed.

Bitcoin was initially minable with consumer hardware (CPUs), but later the mining difficulty increased to the point where purpose-built mining hardware such as ASICs are required to have remotely acceptable profits. However, the difficulty of Ethereum did not increase that much. That, coupled with the fact that the Ether cryptocurrency skyrocketed in price (at its peak reaching an all-time high of $4,800), meant that Ethereum was an easy blockchain to mine, one that brought astonishing profits to even small-scale miners.

For example, with an NVIDIA GeForce RTX 3070, you can mine up to $25 a week or $100-$125 in a month (depending on your electricity costs!). With a high-end RTX 3090 you could easily earn more than double. Once you recoup the money invested, it was basically a completely effortless, stable income. The rush on Ethereum mining was partly responsible for the fact that the RTX 3000 series GPUs did not exist on store shelves when they were released in 2020, with crypto miners immediately pinning the few GPUs that made it to retail.

Of course, all (good?) things come to an end. As profitable as Ethereum mining was, the power consumption generated by that practice was enormous, ultimately damaging the environment. And the network itself was volatile, to the point where gas prices could soar and transactions could become absurdly expensive. The Ethereum 2.0 Merge aims to solve both problems for the common good, and move things forward towards proof-of-stake. But in the process, it leaves miners without their main source of income.

Alternatives to Ethereum Mining

Common logic would dictate that once Ethereum mining is gone, people can start mining something else. And while they can (Ethereum 1.0 miners are trying very hard to come up with an alternative), it’s not as simple as that.

Let’s take a look at some alternatives that miners are considering.

Alternative blockchains/coins

First, the obvious option: try something different. There are plenty of cryptocurrencies out there such as Ravencoin, ZCoin and others.

Bitcoin mining is out of the question as it is so hard to mine that it is pointless to do this with a regular GPU based rig, especially if you are a small scale miner. If you want to see acceptable gains you will need an ASIC based rig, which can be costly. With Bitcoin’s price fluctuating widely, even if it turns profitable at some point, a sharp drop could completely turn the scene around.

As for other cryptocurrencies, the difficulty may not be high, but most of them do not have a tangible community and as a result, they are not that valuable. When you mine something, you do it to get a reward out of it, and if that reward isn’t really worth anything, there’s no point in doing that. The maximum you can get out of Ravencoin with an RTX 3090 is $25 per month, and other cryptos offer even less. Are you making real money or are you just damaging your hardware and wasting resources to get a few extra dollars in return?

Ethereum Forks

Of course we also have Ethereum forks. Two specific forks have made headlines since the merger. Ethereum Classic (ETC), the original Ethereum blockchain, is a few years older than the Merge and is the continuation of the first iteration of Ethereum. Ethereum 1.0 was actually a fork of ETC and became the more popular option.

In addition, after the merger, a new fork, called “Ethereum Proof-of-Work” (ETHW), also appeared.

Both ETC and ETHW are potential substitutes for Ethereum to keep the dough rolling. And indeed, due to media attention and miners gathering around each crypto, their price has increased. ETHW was trading at about $5 when The Merge took place, and the price was around $8 at the time of writing, according to CoinMarketCap. Looking at the CoinMarketCap ETC Chart, the price of that currency has fallen. Even if they manage to move up, it’s a second to keep the momentum going. Mining something alone does not guarantee that it will increase in value. It’s a question of supply and demand – there may be a lot of supply, but if there’s no demand, it’s worth nothing.

According to The NewsCryptoChandler Guo, one of the organizers of the ETHW fork, believes that the ETHW price will eventually overtake Ethereum in the next decade. He is very optimistic about it, but the outlook for us is murky. We should also keep in mind that for many miners, mining was their main source of income. Most crypto miners are not in it for the long haul and will not believe in a concept blindly or in hopes that its price will rise in 10 years. They want money now. And at this point, at the time of writing, neither ETC nor ETHW is profitable for mine. You only get a few cents a day.

Crypto Mining Is Dead (At Least For Now)

Unless there’s a shiny new alternative to Ethereum, one that people actually want to use for other purposes that aren’t just mining, GPU crypto mining is effectively done. If you have a GPU based rig, mining is essentially pointless at this point.

You damage your hardware, increase your energy bill, all for a few cents. It’s not worth it, if you ask us.

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