Crypto mining is nearing an inflection point. Bitcoin and Ethereum are the two most dominant proof-of-work currencies at the moment. Some of Bitcoin’s largest exchanges and miners have historically not been able to alter its consensus rules.
Ethereum is constantly changing, and the biggest change could come as early as Q2 2022.
How does ETH 2.0 affect crypto miners?
With Ethereum’s expected transition to proof of stake (PoS), graphics card miners will no longer be necessary for adding blocks to the Ethereum blockchain.
However, this transition has been discussed by the Ethereum community since 2016 and it continually gets pushed back. Ethereum Core Devs Meeting #124 took place on October 15, and a proposal was presented to push the December 2021 “difficulty bomb”.
“Given the specialized nature of Ethereum mining, it would be our bet that those miners will leave the market completely.”
Mining becomes exponentially more difficult at a certain block height, and the chain essentially freezes and a hard fork takes place. Many in the community expect that the transition to proof of stake will finally happen around June 2022, when the difficulty bomb is expected to occur.
Miners who are currently mining Ethereum will suffer a great loss as a result of this transition. In addition to likely being less profitable to mine, these other coins are significantly smaller than Ethereum, and will require the miners to switch their graphics cards to mine them. The graphics card market could be flooded with cheap used chips from miners if the transition to PoS happens as recently announced.
In other words, Ethereum miners are at a very high risk that their machines will become obsolete overnight. Cash flow would cease immediately, and GPU resale value will plummet. As a result of this, the majority of capital deployed into crypto mining goes toward Bitcoin mining specifically..