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ETH2.0 is approaching, how can miners achieve "re-employment"?

老雅痞

2022-07-07 09:00

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Original title: " ETH2.0 is approaching, how can miners achieve "re-employment"? "

Original author: Old Yuppie

This article comes from the WeChat public account: Old Yuppie

The consensus mechanism of Ethereum officially plans to shift from Proof of Work (POW) to Proof of Stake (POS), I don’t know Can't believe it's been 4 years. 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 plans to completely replace the energy-consuming and increasingly centralized Proof of Work after integration with ETH1.0.

In the PoW stage of Ethereum, miners compete for the right to bookkeeping through hash collisions and sort 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%.

However, apart from some positive iterations, this change also means that the traditional mining behavior will be unsustainable, which will undoubtedly affect a large number of miners have a huge impact. 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.

Back to Ethereum 2.0. While the ethereum merger has been planned for years, ongoing technical challenges have repeatedly delayed its completion. Based on the eagerness of ETH core developers and the successful merger of the Ropsten testnet, if there are no accidents, the mainnet merger is expected to be on track from August to September (it seems difficult now).

ASIC and GPU

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. For example, GPUs are often found in workstations and gaming computers to render images, encode video, or perform any other application that requires repeated calculations.

Due to the distributed nature of the Ethereum mining industry, it is difficult for us 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, who specializes in crypto mining consulting, 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 an Ethereum ASIC because its hashing algorithm is compatible with ETH's. 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.

So after the Ethereum merger, GPU miners became the only Ethereum mining hardware that could be repurposed for other applications. So what should miners do after the merger of Ethereum?

GPU mining machine reuse scheme

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The well-known research institution Messari, after analyzing a large number of GPU mining machine reuse schemes, came up with the following relatively feasible schemes:

1. Mining other PoW Token

For some miners who have been mining for a long time, they may have become accustomed to passively Earn cryptocurrency from mining rigs 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 website that calculates mining yields, miners can determine the profitability of mining cryptocurrencies 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 after the ethereum merger Token , such as Ethereum Classic. In addition, Hut 8 also plans to switch its GPU hashing power to Luxor Mining Pool to mine coins including BTC, DASH, ZEC, and SC. Token , all profits are paid in Bitcoin.

But there is also a problem that cannot be ignored in this scheme-these PoW Token The market size of Ethereum is far smaller than that of Ethereum.

As of June 9, GPUs other than Ethereum can mine Token The total market cap is $4.1 billion, or about 2% of Ethereum’s market capitalization. Top 7 GPUs Mineable by Miner Revenue Token Among them, 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 that there is no Ethereum GPU can mine Token How far will the market size shrink.

A common misconception in the mining world is that an increase in hashrate leads to Token Prices go up when in reality the opposite happens. If ETH GPU miners flood into a certain PoW overnight Token , which will substantially increase the Token mining difficulty, 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 fraction of the ETH hash power can be migrated to other GPU mineable Token .

Others can be mined via GPU Token The only way for the public chain to receive Ethereum computing power is to Token Prices have risen by several orders of magnitude. Given that the user activity on these public chains is much lower than that of Ethereum, its Token The probability of a substantial price increase is very small. Furthermore, 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 the GPU miner revenue list, the network actually only locks up $120,000 Total value 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, a massive migration of miners to other PoW Token Difficult as 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. Provide high-performance computing data centers

After several years of development, Ethernet The scale of Fangminers has grown from individual miners who only own small mining machines to large-scale mining companies that operate thousands of mining machines and are 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 open, go Rebuild the internet on a centralized 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 provide video transcoding services using GPUs.

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 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

From mining Miners who have accumulated ETH in the mine can choose to sell their GPU mining machines and become an Ethereum PoS validator node. The network requires validators to stake at least 32 ETH to run a validator node. In return for validating transactions, validators are rewarded in the form of block rewards, tilt incentives, and MEV. Depending on the number of stakers and the level of network activity, yields can range from 7% to 13%. For miners who do not have 32 ETH or do not want to take the risk of running a verification node, they can also participate in the pledge through ETH 2.0 pledge service providers.

Summary

Successful in Ethereum After merging the main network, PoW Token The GPU mining market in China is likely to shrink rapidly. And as miners realize that mining other PoW Token Only the few miners with access to cheap energy will remain profitable, and the majority of GPU miners will be resold on the secondary market.

The miners who are willing to invest time and money will be able to transition to a high-performance data center operator or a node provider of the Web3 computing power protocol, so these two Both markets will have huge growth potential.

Although the merger of Ethereum seems to be the end of GPU mining, it may also start another era, and the "displaced" miners will not sit still, They will be looking for new opportunities in Web3.