GPU Mining After The Ethereum Merge
If you dont want to read the whole article, this video below goes over everything covered.
The Ethereum Merge
The Ethereum merge is a change that is happening on the network, the network is switching from proof of work to proof of stake. This was supposed to happen way back in 2019 but has been pushed back multiple times since then. Today as of writing the Ethereum team has said it will be done by November but many miners are still skeptical on if the merge will be done by then. Personally I’ve been mining for the past year or so and it has been pushed back 3 times since I started mining. It will probably be pushed back further than November but all miners need to put in place a plan for when it eventually does come in. The merge is supposed to come into effect when the Ethereum difficulty bomb goes off. The difficulty bomb increases the block time exponentially on the network to ensure that miners are still rewarded for making block on the network while the switch to proof of stake is happening. This allows for the network to stay up and running while the merge is happening, the difficulty bomb will keep increasing block times until there are no more blocks to mine and the merge will be fully completed. Recently the difficulty bomb has gone off but the Ethereum team have plans to delay it because they aren’t ready to merge yet. This is good for miners as they get to keep mining at low block times for a little bit longer. As of writing this the Ethereum profitability isn’t very good due to both the crypto crash and the longer block times of 16 seconds. So right now is the best time to shut off rigs and put a plan in place for mining after the Ethereum merge. Personally I’ve been stopping my rigs and cleaning my GPU’s ready for when they eventually start to mine a different coin. Cleaning your GPU’s allows for better hash rates while mining and lower temperatures due to there being less dust and better airflow through the heat sinks of your GPU. Now let’s discuss options for GPU miners after the merge.
Mining Other Proof-of-Work Coins
There are a lot of proof of work coins out there to mine, but it only makes sense to mine if you’re being profitable. This is where we run into a few problems with these other proof of work coins. Most coins that can be mined, only have a small overall hashrate on their networks, when the Ethereum merge happens we will see a hashrate migration from Ethereum, to all these other coins. Right now there is over 1 Peta-hash on the Ethereum network, which is 1 billion mega-hash. All this hashrate needs to go somewhere. It will be diluted into all these other proof of work coins. This in turn will drive the difficulty of these coins up and they will not become profitable to mine. For example Ethereum Classic is a coin that was the original Ethereum coin, they had a fork due to a network attack which led to the creation of the main Ethereum coin. The hashrate on the Ethereum Classic network is only 25 tera-hash, which is 25 million mega-hash. So even if Ethereum Classic receives 5% of the 1 billion mega-hash from the main Ethereum network it would put the Ethereum Classic network at three times the amount it is now. That would be a network hashrate of around 75 million mega-hash. When this hashrate hits the network the difficulty will shoot up because more people are mining and it would in theory slash the profits by around 65%. And remember Ethereum Classic is one of the biggest proof of work coins, so when it comes to other coins the profits will be slashed further when they receive the hashrate from Ethereum. The option to mine other coins is there but the profits will most likely be in the negatives or slightly above positive. Now the one savor for mining other coins is the price of a coin. All these coins currently don’t have a price that can support profitability while mining, however if the price of a coin goes up you’ll be able to mine it profitably. For example Ethereum Classic sits at around $17 a coin, if the price were to sky rocket to let’s say $100 a coin, it could in theory support a higher amount of hashrate on the network while still being profitable to mine. I predict that we will see a hike in price of these proof of work coins when the merge happens as price tends to follow network hashrate. Meaning that if coins receive more hashrate their price is likely to go up a little bit. This is because there will be more adoption of a coin and so the network will be used to buy and sell more of the coin, this will be through miners selling for profits or mining pools swapping coins for payouts. The coins I’m looking to mine going forward are Flux, Ravencoin, Ergo and Ethereum Classic.
Datacenter’s and HPC’s
The second option we have is to offer your GPU’s computing power to data centers and HPC’s, in simple terms you allow other companies that need computing power to use your GPU to do things such as A.i learning or to solve complex math problems. This is more of an obscure way of making money from your cards as you have to do some digging to find these companies that require your GPU’s computational resources. There are lots of companies that want CPU power but there are also some out there that need GPU power. The biggest example of this is probably the SETI project, which was set up to analyze radio signals and they asked people to download a program which runs in the background of your computer and processes the radio signals, which uses your computing power to do. There is also a command line you can run to search for prime numbers called prime95, whenever you find a prime number you get rewarded. In theory it’s just crypto mining but for a different type of hashing algorithm. Most large data centers don’t need your computational power but if there are small ones in your surrounding area then email them and see if they would like to use your GPU power for their center. This will probably bring in less profits than mining right now but when that merge comes in the profits from data centers will be more than any coin you can mine. I would also be careful that they don’t overwork your cards and make sure that they keep them at good temperatures with core and memory clocks at a steady number.
Web3 Computing
The next option is similar to the last one discussed but is more centered around the Web3 space and providing compute to these Web3 services. As Web3 is becoming the new layer of the internet, many companies are trying to get into the space but need computing power to run all of their systems. Web3 is basically the integration of multiple different block chains put together to form a World Wide Web, this allows for developers to build on any blockchain and still have their product exposed to these other different chains. This all runs off nodes on a network and if you set up a node on a Web3 network you’ll get rewarded in a form of crypto. Your computing power can be put towards things such as data services, digital marketing systems, decentralized domains and D-web hosting. All of this is done in the effort to make decentralization the main goal, where banks, governments and big tech companies don’t have control over your assets anymore. So by lending your computing power you’re making it more decentralized and pushing for a better Web3.
Staking Mined Ethereum
The final option that I think a lot of GPU miners should do is take their Ethereum and stake it. When the merge happens, all of the crypto exchanges will be opening staking pools for Ethereum. In turn you will be allowed to stake your Ethereum that you’ve been mining. Many big exchanges such as Coinbase have already got this feature up and running ready to go when the merge does come in. Depending on how much Ethereum you have mined, you could also choose to set up your own validator node which requires 32 Ethereum to start. In the current market that’s only worth around $35,000, but if you’ve been mining for a long time you should’ve been able to accumulate close to this. These validator nodes will allow for you to keep all the rewards of staking without having to pay fees to the major exchanges in a staking pool. Personally I think that Ethereum’s merger will be the downfall of Ethereum because staking doesn’t really offer any work to be put in. This means there is nothing to measure the worth of Ethereum on. For example Bitcoin uses a large amount of electricity, if everything in Bitcoin goes wrong we can still link the price back to the amount of electricity used and it would give us a true price of Bitcoin. However while Ethereum has that same structure now, it will not have it going forward in the future. Staking over a long enough period of time will create a deflationary cycle because more coins are coming in but the incentive to further stake these coins will gain you more coins. And if a majority of holders keep staking and reinvesting then the value of one coin will become less and less every staking cycle. To stake your coins all you have to do is sign up to a major exchange and they will allow you to put coins into your account and then you can choose how long you want your coins to be held, obviously if you stake for longer you get better returns. Also if you stake more coins you’ll get more returns on those coins. On Coinbase right now they have an average return of 4.12% APR. This means after a year’s worth of staking you’ll gain 4.12% of the original amount staked. This figure will probably go up when the merge happens because right now blocks are supported by miners.
Flux Nodes
To add future to this node topic you can also look into running nodes on different networks if you have the capital, a lot of cryptocurrencies offer rewards for running nodes. The best one as of right now are Flux nodes. There are 4 different tiers of Flux nodes, with each costing different amounts. We have the Titan node, Cumulus node, Nimbus node and the Stratus node. These nodes work with miners to confirm blocks and transactions, then you get rewarded in the native Flux coin. The block reward is split into 4 slices when a new block is produced. The biggest slice of 50% goes to the miner, then 30% goes to the Stratus node, then 12.5% to the Nimbus node and finally 7.5% to the Cumulus node. The reason for this split between the nodes is because the more costly ones get more profits. I mentioned there were 4 nodes and the last one left out is the Titan node. It’s the cheapest one out there and requires a pooling of Flux coins from various different users to create a Cumulus node. So the minimum amount of Flux needed for a Titan node is 50 Flux, you can put up to 250 Flux into a Titan node. It costs 1000 Flux to set up a Cumulus node, for a Nimbus node it costs 12,500 Flux and for a Stratus node it costs 40,000 Flux. Right now I think the Cumulus is the best option because the other two nodes cost too much. Remember if you want to put this money into a Flux node you also have to set it up by yourself, the Flux-labs YouTube channel has step by step videos on how to do this, so check them out if you’re stuck on any problems when setting up your node. Currently flux is trading around $0.46 per coin so now is a great time to buy a large amount of the coin, this is because we have seen highs of $4 with this coin.
