Ethereum completed the long-awaited upgrade from proof-of-work to proof-of-stake on September 15, 2022. The conclusion of the merge has removed Ethereum miners from the network, replacing them with stakers.
Before the upgrade, Ethereum used a proof of work consensus mechanism to validate transactions and keep the network secure. But post-merge, the network relies on proof of stake to run its ecosystem.
The merge caused diverse controversies in the crypto space, with miners threatening to hard fork the Ethereum mainnet. While many enthusiasts supported the move, others rejected the idea. But after the merge, miners hard-forked the network to remain operational.
So, what is the state of eth mining after the merge? Is mining still profitable post-merge? What will miners do with their GPUs? Find the answers to these questions and more blow.
Ethereum Merge - What Is The Process?
Ethereum merge upgraded the network from a proof of work to a proof of stake consensus mechanism. The former required higher computational power in the form of electricity to ensure network security and process new transactions. The process required miners to solve complex mathematical problems to add new blocks of transactions to the blockchain.
But the merge eliminated these processes, replacing them with an energy-efficient way of securing the network and validating transactions. The upgrade removed miners from the network, replacing them with stakers.
Instead of spending much money on mining hardware, network users will lock 32 ETHs minimum to qualify as validators on Ethereum. Also, users who can't get the entire 32ETHs can contribute fractions of ether in staking pools to participate in transaction validation and earn staking rewards.
Ethereum's developers tested the idea of the merge on the Beacon Chain for two years. This blockchain ran alongside the original Ethereum mainnet. The merge joined the mainnet and the beacon chain to create Ethereum 2.0. According to the Ethereum Foundation, the merger will make the network more energy efficient.
However, the merge won't make transactions faster on Ethereum. It could only increase the frequency of producing blocks on the network. Also, transactions on Ethereum won't be cheaper post-merge.
Different Phases of the merge
The idea of achieving a scalable network has existed since the beginning of the Ethereum blockchain launch. The developers have made a series of upgrades, but let's outline the ones closer to the merge.
- Staking deposit contract, October 14, 2020
This contract introduced the concept of staking to the Ethereum blockchain. It influenced the eventual launch of the beacon blockchain. Number of blocks: 11,052,984
- Beacon chain Genesis, December 1, 2020
This was another blockchain running parallel to the Ethereum mainnet operating fully with the proof of stake. The beacon chain required 16384 deposits of 32 staked ETH tokens to be functional. The chain started producing blocks on December 1, 2020. Ethereum's developers used it to test how the PoS would work.
- Berlin Upgrade April 15, 2021
This Upgrade optimized the cost of gas for some EVM actions. It also supported multiple transactions. Block Number: 12,244,000
- London Hard Fork, August 5, 2021
This upgrade was the Ethereum Improvement Protocol 1559 or EIP-1559. It changed transaction fees and the process of gas refunds.
Block number: 12,965,000
- Altair Upgrade, October 27, 2021
It was recorded as the first scheduled upgrade for the Beacon chain. It added penalties for the inactivity of validators as the Merge drew closer.
- Arrow Glacier upgrade, December 9, 2021
This upgrade delayed the difficulty bomb by some months.
Block number; 13,773,000
- Gray Glacier Upgrade, June 30, 2022
This upgrade also delayed the difficulty bomb by three months.
Block number: 15,050,000
- Bellatrix September 2022
This upgrade was the second scheduled upgrade for the Beacon Chain. It was done in preparation for the merge. It implements penalties on validators for inactivity.
It also included an update to the fork rules in preparation for the merge and transition to Proof-of-Stake.
Epoch number: 144,896
- The Merge September 15, 2022
The merge was the final migration from the Proof-of-Work to the Proof-of-Stake chain. It combined the Ethereum mainnet and the Beacon Chain, bringing the end of mining and the rise of validators.
Block Number: 15,537,392
What Is Eth Mining
Ethereum mining is a process of verifying transaction blocks on the network. Blocks contain new transactions to be added to the blockchain. Miners ensure that the transactions are accurate and follow the requirements before adding them to the blockchain.
Ethereum miners are selected network participants that verify these transaction details through a proof of work consensus mechanism. The PoW process entails solving complex mathematical problems and showing proof. Miners consumed large computing power, thereby keeping the network secure.
Mining is also a process of producing new ETH coins. Miners who carry out these verifications are paid in new ETH, thereby adding to the supply of available coins.
There were three options for ETH mining, solo mining, cloud, or pool. Solo mining requires buying GPUs capable of mining Ethereum. If cloud mining, a miner will join a mining company and buy a package. But for, pool mining only entails joining a mining pool.
The number of days to complete this process and earn 1ETH sometimes run into 7.5 as of September 13, 2021. The days will be longer if the Graphics Processing Unit hash is around 28.2 MH/S. The number of ETH coins miners could get in a day depends on the GPU hash rate, mining capacity, and difficulty. Also, mining profitability depends on the cost of electricity.
But now that Ethereum has upgraded, there is no opportunity for mining on Ethereum 2.0. Miners can look for alternatives such as Bitcoin, Ethereum Classic, or other networks on proof of work.
Ethereum Staking, What Is It?
Ethereum staking involves locking ETH in a wallet to qualify as a validator. Validators provide support and enough security for the network. Also, they verify and confirm transactions on Ethereum for staking rewards.
Initially, staking was not part of Ethereum’s operations. The network relied on mining to secure the network and verify transactions. But after the merge, Ethereum 2.0 now uses proof of stake instead of proof of work.
How staking works for Ethereum 2.0
On the PoS network, validators can run nodes or send their token to a staking wallet. The first option's minimum requirement is 32 ETHs, while the latter can be any amount. But no matter the option, the algorithm randomly chooses those to create a block and verify and confirm its transactions. This random selection will undoubtedly favor validators with higher ETH stakes.
How to become a validator on Ethereum 2.0
- Buy 32 ETH tokens and store them in your wallet
You can buy the ETH on exchanges or through P2P. High stakes guarantee higher rewards.
2. Run a staking node
Download one or two clients on your machine. Set the machine up and make sure it is online. Download and install software like Nimbus, Lighthouse, and Lodestar compatible with Windows or other platforms. Keep the node on the internet always. You can run multiple nodes or combine all your ETH in one node for staking.
3. Lock the ETH or move to a staking contract address
Go to the ETH 2.0 official launchpad and follow all instructions before making payment to the address. Once your payment is confirmed, your address is validated, and you become a validator.
4. Run the staking node
Running a node might be difficult if you're not a professional on Ethereum. You must understand how the blockchain work to avoid penalty. The network enforces penalties for breaking the rules on nodes. Your Eth can be slashed for inactivity, or you can be removed as a validator.
5. Consider a VPS server.
A VPS is also another platform on which you can run your node. Here you're renting computing power, and you don't need to stay online since it keeps you online.
After renting, you can install staking software to connect to the Ethereum blockchain. But you must understand the basic operations of VPS and software.
The ideal VPS should provide a minimum of 6 core CPUs or higher. With a memory capacity of 4-8 GB RAM and 400-500 GB SSD drive.
6. Record your earnings
Your profits from staking Ethereum largely depend on the amount of ETH staked and the nodes. An individual node currently yields 6% profit and 5.35% for an Ethereum staking pool.
Using an Ethereum staking pool
To use an Ethereum staking pool: there are things you need to know:
- You can easily earn staking rewards without running a node with a staking pool.
- Members earn rewards according to the ETH distributed.
- Staking pools charge some fees for the service.
- Users can stake any amount of ETH they can afford.
- The staking power is measured by the total amount of ETH staked in the pool by all members.
- Annual payout yields differ in staking pools.
Ethereum 2.0, What Is It?
Ethereum 2.0 is the latest version of the Ethereum blockchain. After the successful merge, the network became fully operational on September 15, 2022. This upgrade aims to increase the efficiency and scalability of the blockchain.
It is a network upgrade where Ethereum migrated from the Proof-of-Work system to the Proof-of-Stake. Ethereum 2.0 is also known as the consensus layer. It ensures that devices on the network are working according to the rules.
The first phase of the Ethereum 2.0 project, called the Beacon chain, went live on December 1, 2020. The second phase: "the merge," has successfully merged the Beacon chain with the Ethereum mainnet
The last phase of this upgrade is the "Shard Chains" It will scale the Ethereum network from using one blockchain to operating on 64 new chains. This upgrade will make it a lot easier to run an Ethereum node.
Thus, the final upgrade to shard chains is expected in 2023.
What Happens To Your ETH Mining Rig?
With the long-awaited upgrade – the merge now complete, mining hardware and mining facility might become obsolete. Miners will not confirm transactions on the new Proof-of-Stake mechanism. They’re faced with the reality of a sudden decline in profit as there will not be eth mining after merge.
But there are some options available for Ethereum miners now.
Mining other coins or forks
Miners can pivot to mine Ethereum Classic, Ravencoin, and Ergo. However, many are skeptical about the EthereumPOW token, a potential fork from the Ethereum network that is highly speculative.
While it might seem smart to diversify now, the profitability of mining other tokens will likely fall. Ethereum accounts for more than 80% of the profits recorded by miners.
Mining smaller coins like Raven will see profits drop drastically. They are no match for Ethereum, which is the second largest cryptocurrency.
Focusing on Ethereum Classic
Ethereum Classic might be the next project for miners to focus on. Some crypto miners believe it will do well since it is old and available on most exchange platforms.
Some other experts believe it will take a while for Ethereum Classic to adapt to a higher hash rate. For now, mining ETC will yield lesser mining revenue for miners.
However, there is optimism for the future of Ethereum Classic. Some Crypto news reports confirm that ETC's value has increased by 37% since August 2022.
Mine Others or Sell Hardware
Small-scale miners have two choices: keep mining other tokens or sell the hardware. Many are currently weighing their electricity costs against potential earnings.
Some miners have chosen to mine the EthereumPOW token, currently trading at $6.01. This token is a fork of the Ethereum mainnet and is still an untested project. Others have chosen to stick will older projects like Ethereum classic or Ravencoin.
A common sentiment for the near future is that most miners are not ready to sell their rigs. Rather, they will likely join other projects or wait for events to unravel.
FAQ, Commonly Asked Questions About Ethereum Mining
Find the answers to some questions about Ethereum miners' plan after the merge and the effect of the Merge on ETH price.
Will the Merge increase the Ethereum price?
According to crypto news, the Ethereum price has seen a 15% decrease after the merge. ETH token is currently trading at $1338.06, a significant drop from $1573.21 as of September 14, 2022. But the cryptocurrency market is largely speculative and controlled by many factors. So, there is a possibility of an increase soon.
What happened to ETH mining?
Ethereum has now fully migrated its tokens to the Proof-of-Stake (PoS) token after the merge. Crypto mining is almost an outdated phenomenon for Ethereum. This new phase has rendered mining hardware obsolete on the network, as the Proof-of-Stake is a more energy-efficient option. Miners have now been replaced with validators who stake their tokens to process a transaction.
Has Ethereum completed the merge?
The Ethereum upgrade was completed on September 15, 2022. Ethereum network has successfully migrated from Proof-of-Work to Proof-of-Stake. The network is undergoing constant improvement post-merge for the next phase, referred to as the end game.