“The Merge” Brings an End to GPU Mining for Ethereum
Ethereum is the second most valuable blockchain outside of Bitcoin, but it hasn’t come without a cost to the environment. Initially, Ethereum relied on Proof-of-Work (PoW), which utilized ETH miners to process transactions and generate new coins. However, this came with extremely high “gas prices” because of the energy costs associated. This is where “The Merge” comes into play; a recently executed initiative that reduced energy usage by 99% on Ethereum and removed the gas fees. Despite being a positive move for the planet, where does this leave the former Ethereum miners?
What Is GPU Mining?
GPU mining is the process of using a computer’s graphics card to solve math equations to validate blockchain transactions. For a cryptocurrency to be mined, it must utilize PoW protocols. Bitcoin, Dogecoin, Litecoin, and Monero all support miners. Before “The Merge” took place, Ethereum operated on a PoW infrastructure.
People put plenty of work into GPU mining because it involves investing in high-end gaming graphics cards and programming a computer to mine coins, which is extremely complex. In a world where Ethereum is the highest-ranking altcoin (find the price index of Ethereum here), miners relied on ETH to make a return on investment.
What Is “The Merge”?
The Merge has been promised by Ethereum for some time now, but it’s finally come to pass. Essentially, The Merge brings together the Ethereum Mainnet and the shiny new Beacon Chain, which operates on Proof-of-Stake (PoS). The change converted the Mainnet from a PoW chain to PoS, removing the need for miners.
What Does This Mean For GPU Miners?
With the most profitable mining coin unavailable, GPU miners are left scrambling and searching for ways to make up their money. Miners that already recovered the investment in equipment have likely just given up. However, those left are turning to alternative minable coins. In particular, they’re looking towards Ethereum Classic, which is a separate entity from Ethereum following the 2016 DAO attack.
Despite Ethereum Classic still being an option, it’s no way near as profitable as Ethereum. In 2021, Ethereum Classic miners only managed to net $318 million, whereas Ethereum miners netted around $18.4 billion. To sustain the same profitability as Ethereum, Classic would have to increase by around 5000%. However, if you carry out research and assess predictions, this simply isn’t possible.
Casting Ethereum aside, there is an alternative way for ETH miners to pull in worthwhile profits. For example, HIVE Blockchain has implemented a switching algorithm into its mining system, which targets the most profitable PoW coin. Then, they exchange them for Bitcoin as a means of increasing their BTC portfolio. ETH GPU miners are benefiting from the switching algorithm by signing up with Nicehash, which allows them to use the algorithm.
Conclusion
There’s uncertainty surrounding Ethereum following The Merge, especially considering the fallout felt within the mining community. There are alternatives for miners to fall back on, but they need to be willing to suffer significant losses or find methods to make up the difference.