Source: Adobe/albert schleich
By now, every Ethereum (ETH) fan knows that this blockchain is in the process of switching from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. What’s less widely known, even among those in the Ethereum community, is what will happen to the miners that help secure this network.
Having invested plenty of capital in developing mining rigs and facilities, it seems unlikely that the end of Ethereum mining will result in such miners leaving the industry altogether. In fact, analysts expect that Ethereum miners will shift to another blockchain that (like Ethereum) is friendly to GPU-based mining rigs, although they can’t say which these will be.
One thing they can say, however, is that it’s unlikely Ethereum miners will shift to mining Bitcoin (BTC), given that the latter revolves more around ASIC chips (which are single-purpose). The upshot of this is that other networks may become more computationally secure in relation to Bitcoin, insofar as they’ll benefit from receiving Ethereum’s hashpower.
Ethereum’s miners haven’t been overly happy about recent developments and proposals concerning the platform. They threatened to protest the upcoming EIP 1559 upgrade, while the transition to Ethereum 2.0 — and proof-of-stake — will make them redundant (as far as Ethereum mining is concerned).
That said, it seems as though they still have a future to look forward to, albeit with different blockchains. According to Evercoin founder and Gumi Cryptos General Partner Miko Matsumura, Ethereum’s use of GPU-based mining means they can transition to others.
“ETH miners will have plenty of options. They generally are mining with GPU and not ASIC which gives them much more flexibility on the use of the computational resource, whether they want to switch to another coin or use GPU for other workloads like AI or remote rendering tasks,” he told Cryptonews.com.
Ethereum Foundation community manager Tim Beiko agrees with this prediction, although he notes that miners who use Ethereum-specific ASIC rigs will have a tough time finding a new home.
“Most miners on Ethereum use GPUs and those can mine on any GPU-friendly chain. There are Ethereum ASICs, and those will be obsolete except if another chain uses the same mining algorithm as Ethereum,” he told Cryptonews.com.
Given that Ethereum ASICs are specific to Ethereum, there’s little doubt that ex-Ethereum miners won’t be moving to Bitcoin.
“ETH miners won’t mine BTC most likely as BTC relies heavily on ASICs and rather than upgrade their miners with ASICs they will likely want to get the value of the GPUs since they are usually using fairly expensive GPUs and want to get the value out,” said Miko Matsumura.
However, according to ConsenSys’ Lex Sokolin, it will be hard to accurately forecast which specific GPU-oriented coin(s) will attract former ETH miners.
“This one is quite tough to predict, because as you imply, once you have a lot of hardware optimized for a particular mining activity, it is difficult to repurpose. Different consensus algorithms also require different types of hardware optimizations, so switching from one chain to another of an equal size isn’t trivial,” he said.
Picking the most popular options for migrating Ethereum miners may be difficult, but we can at least highlight some of the more prominent GPU-friendly networks:
- Ethereum Classic (ETC) – at the time of writing, ranked 21st by market cap
- Monero (XMR) – ranked 26th
- Zcash (ZEC) – ranked 56th
- Ravencoin (RVN) – ranked 98th
- Komodo (KMD) – ranked 171st
- Haven Protocol (XHV) – ranked 172nd
- MonaCoin (MONA) – ranked 194th
- Beam (BEAM) – ranked 403rd
- Aeternity (AE) – ranked 412nd
- Vertcoin (VTC) – ranked 508th
- Grin (GRIN) – ranked 624th
As the list above reveals, Ethereum miners are probably going to gravitate towards coins with a bigger market capitalization, if only because it will be more profitable to mine them.
That said, while Tim Beiko confirms that some miners have been talking about some of these networks, it won’t be trivial to switch to them.
“Ethereum Classic and Ravencoin are the two that I’ve heard mentioned, but I’m not sure if they will maintain an algorithm which is compatible with Ethereum’s ethash,” he said.
Impacts and the future
According to BitInfoCharts, Ethereum currently boasts a hashrate of 597 Th/s, which is the biggest of any network apart from Bitcoin (which claims a whopping 114 Eh/s).
This is a significant amount of hashpower, and will make a big difference to the stability and computational power of any chain which receives a significant chunk of it.
For example, Ethereum Classic’s hashrate is only 28 Th/s, while Monero’s is only 2.5 Gh/s (or 0.000246 Th/s). Adding hashpower from Ethereum will make a big difference to the stability of such coins, particularly insofar as avoiding 51% attacks are concerned.
According to Crypto51.app, launching a one-hour 51% attack against Ravencoin, for instance, costs only around USD 23,300 (compared to USD 1.6m for Ethereum). For Aeternity, it costs only USD 329!
For a long time, analysts have pointed to Bitcoin’s massive hashrate as an indicator of just how difficult it would be to undermine its security, while they’ve also pointed to the smaller hashrates of other coins as an indicator of how fragile they are. This sentiment may have potentially dissuaded some investors from buying the corresponding cryptoassets.
With the arrival of Ethereum 2.0 and the migration of former Ethereum miners, such networks as Ethereum Classic, Monero and Ravencoin may find that their reputations as secure blockchains grow.
In turn, this could result in price increases, which will be good news for the cryptoassets concerned. And good news for the miners who transition to them.