With the recent availability of graphics cards available at retail prices, a lot of people have considered getting into Ethereum mining with a GPU rig. However, this is probably a bad idea to do in 2022 because the Ethereum mining end date is likely coming this year.
Before you decide to invest in GPU mining, you need to understand the current state of the industry to truly gauge whether it would be a profitable investment or something you should avoid. When Ethereum mining comes to an end, there will still be other cryptocurrencies you can mine with a graphics card, but the other options aren’t as profitable. I’m personally active as a GPU miner, so I have a lot of knowledge I can share with you on this topic that can help.
Proof of Stake vs Proof of Work
Before I talk about the Ethereum Merge and the potential end of GPU mining, I want to discuss the reason behind the Merge. When you’re GPU mining, the crypto network is operating in a proof of work state to validate transactions. As a result, proof of work is very energy intensive and is a big part of the reason why cryptocurrencies are under fire since excessive energy usage without a real purpose isn’t helping climate change goals.
Ethereum wants to change to proof of stake, where existing tokens are used as validators instead of computers. It’s dramatically less electricity consumption, but is it really a wise choice? I’ll get into this more in a bit to share my opinions.
On the downside, proof of stake is bad for decentralization. In my opinion, this was the whole purpose of crypto in the beginning. Both of the top 2 crypto coins are currently proof of work – Ethereum and Bitcoin. That should be an indication to investors and to Ethereum developers what is actually desired. What is best may not always be wanted.
Ethereum Merge & Mining End Date
The real Ethereum merge and the mining end date is supposed to take place in August, as currently scheduled. However, this merge and end of GPU mining has also been planned for 4 years now. They’ve pushed back the merge date countless times. I wouldn’t bet the farm on August actually panning out, but I suppose they will eventually get a release date correct.
A testnet for Ethereum will be implementing the merge tomorrow, June 8, 2022. I believe it’s going to take a flawless test merge for the real merge to take place as scheduled in August. It seems all of their tests up until now have had some type of minor or major snag, so again their track record doesn’t exactly instill a lot of confidence.
We will have to see what happens with the test merge to cast additional judgement. I’ll update this post after the test merge has taken place to provide additional information.
UPDATE July 30, 2022
Everything seems to be on pace for the merge to take place mostly as planned but a bit later, which is basically what I expected. Currently, the planned Merge date is going to be taking place on September 19, 2022. Could this change yet again? It still wouldn’t surprise me.
Vitalik Buterin, the co-founder of Ethereum, has made a public statement about GPU miners and POW. He actually suggested moving to Ethereum Classic (ETC) after the Merge. Prices of Ethereum Classic have doubled recently as a result, so perhaps there could be a chance that mining will live on. It’s going to take a major adoption of ETC for this to happen, but I think it’s possible. I’ve always suspected that Bitcoin and Ethereum are so popular because of POW and debate whether Ethereum will stay #2 after this switch. While it may not be likely, I could see a mass switch to ETC and POW living on while POS Ethereum dwindles. This would truly be the ultimate statement for the crypto community to make concerning POW and decentralization though.
Ethereum Testnet Merge Update – June 11, 2022
The Ropsten testnet for Ethereum is the longest running testnet. A test merge took place here on June 8, 2022. I said I’d update this post with more info about what happened, so here I am!
Ethereum developers reported this test to be a success, but you can also see some cracks in their story. They mentioned a few minor bugs that are still present that need to be tackled, and two more upcoming testnet merges, likely to try to iron out those bugs.
Developers have also mentioned since the testnet merge that they will be delaying the difficulty bomb that was set to go off in August, while also claiming that the merge is still going to take place as planned at that time.
One of the five Ethereum co-founders, Charles Hoskinson, is also the founder of Cardano. He was only with Ethereum for about a year at the very beginning. He now seems to be rather critical of the upcoming merge. He claims that the merge likely won’t happen until 2023 and possibly even 2024. This was a statement released just two days ago on June 9, 2022, just a day after the testnet merge took place.
To me, it feels like some key information is missing here because everything doesn’t add up. Ethereum developers likely don’t want to release bad news that could crash their price of their coin and further depeg it from the value of Staked Ethereum (a rising problem recently). They probably know another delay announcement will be met with a lot of criticism and Ether selling. However, I don’t know if their current approach is the right one to take. It seems like they’re trying to hide problems at this point and still maintain an aggressive timetable publicly. This sounds a lot like the same thing that has happened with the merge since 2017 – lots of big talk and non-stop delays.
Personally, I don’t really see the merge happening in August. I’m not sure if I agree with Hoskinson or not about it being delayed until 2023 – 2024, but I certainly understand his reasoning. He may also know much more than I do about the subject and inner workings at Ethereum. I think the merge could still take place before the end of 2022, although likely later than August. I could see it happening in a rushed manner and a big problem happening, which could be a disaster for Ethereum if that happened. Only time will tell for sure.
Should Ethereum Really Switch?
It looks pretty clear that Ethereum is definitely going forward with the merge. However, I really wonder how much they have considered whether this should truly take place. As I mentioned before, the top 2 cryptocurrencies are proof of work currently. Bitcoin was the original and then Ethereum was created to follow in their footsteps but to add some upgrades. I believe this transition to proof of stake isn’t in line with Ethereum’s original mission. It doesn’t seem like they are considering investors in the equation and just blinded by what they believe the future of the network should look like. There’s a reason why the top 2 coins are proof of work – it’s not a coincidence in my opinion.
A big part of the change is probably the electricity usage. Perhaps Ethereum developers fear government regulation for energy intensive coins. Maybe they think more investors or institutions would support them if they were environmentally friendly. It can be easy to get blinded by the things you seek. I wonder if they’re really considered if their existing support would continue with this type of change.
I feel like Ethereum really gained strength in the early days by catering to GPU miners. Bitcoin reached a point where you could only mine with ASICs, while Ethereum made changes to their algorithms on purpose to prevent ASICs from taking over their network. GPU miners then built businesses, sometimes worth mulit-millions, to mine Ethereum and build the backbone of their network. Now Ethereum is kicking all of the GPU miners to the curb. It almost reminds me of Facebook and the Social Network movie when co-founder Eduardo Saverin gets completely screwed over. No thanks for helping to build the company.
Although I think the merge will happen anyways, I’ll state now on June 7, 2022 that I think it’s a bad idea. I think they should stick with proof of work. You want lower electricity usage, perhaps some changes could be made to the algorithm or the way mining works to make it more energy efficient instead of killing the system entirely? I think the GPU miners will feel burned by this change and are less likely to support Ethereum moving forward.
I’ve been switching my GPU mining business into a Bitcoin ASIC mining business as a result of what Ethereum developers are doing with the merge. I only used Ethereum for mining anyways and without it, I can’t see myself using it at all. If other people feel the same way and follow suit, there could be a huge fallout for this coin that nobody sees coming (at least I haven’t seen anyone talking about it).
What made Ethereum and GPU mining so great was the low barrier of entry. In general, the really good ways to make money are often out of reach for the average person because of the large amounts of cash that are needed to start the investment. Many PC gamers already had the minimum equipment they needed to start making a few bucks a day profit. Expansion could be done at your own pace and in line with whatever budget you had to use.
With the change to proof of stake, the barrier of entry gets much higher and the rewards have shrunk to a fraction of their previous levels. You need 32 ETH to stake for proof of stake. You could stake less with a pool, but there are additional security risks in doing so. At $1,800 per ETH, that’s $57,600. The majority of GPU miners never had anywhere close to that much cash when they got started.
Then there’s another issue of network stability. Proof of work helps to ensure decentralization, so this transition is going to make Ethereum a much more centralized network. As a result, someone could attempt a network takeover to seize control of Ethereum. With GPU mining, this is extremely unlikely to happen as the investment would be enormous. With staking, a handful of ETH whales could band together and take over everything. That’s not the Ethereum I got involved with, and I doubt I’m the only one that feels that way.
Ethereum GPU Mining
Right now, mining Ethereum with graphics cards is still a profitable business, but this really only applies to existing businesses. If you’re considering starting a GPU mining side hustle in your home, I’d highly recommend that you wait until after the merge. Even if the merge gets pushed back more and happens in December, there’s still not enough time left to buy new graphics cards and turn a profit before the merge. Without knowing the landscape and economics of this type of mining after the merge, you can’t accurately figure out if your business plan will work.
So many new people have entered Ether mining recently that the global hash rate has skyrocketed to a new all-time high. This is likely the result of LHR being cracked by NiceHash and cheap GPU retail prices. The bad news is that all of the new money pouring into building rigs will likely end up wasted, but I’ll cover this more in a minute.
Before you consider any kind of cryptocurrency mining, Ethereum or Bitcoin, you have to keep in mind that this industry is a constant arms race. Individuals and companies are constantly buying and bringing new equipment online. In addition, new technology comes out at a rapid pace that makes older rigs less profitable and eventually obsolete. To maintain the same level of earnings over the past two months with ETH mining, I would’ve had to increase my hash rate by roughly 25%, and this isn’t even accounting for the decreased prices.
GPU Mining Post Merge Analysis
Nobody really knows what the economic landscape of GPU mining will look like after the merge happens. For all we know, the merge could be a complete disaster and they quickly revert back to proof of work forever, although this is probably unlikely.
Without Ethereum to mine with a GPU rig, there are still other options. In fact, there’s quite a few of them. With NiceHash Miner, you can choose from 8 other proof of work cryptocurrencies to mine. Depending on the models of graphics cards in your rigs, a few of those options may disappear if you don’t have enough video memory to run the algorithm.
The problem with the merge for GPU miners is profitability. You’ll still be able to mine other coins, but the question is how profitable will they be compared with ETH? Here’s how Ethereum mining compares with the 8 others available on NiceHash:
|zhash – zcash||ZEC||01116|
|*mining income for a slightly tuned down 3090 in mBTC. 0.00001000 = 01000 mBTC, which is equal to about 31 cents when Bitcoin is worth $31,000.|
Right now, profitability will be lower mining other coins besides Ethereum. Conflux (CFX) mining with the Octopus algorithm is currently the most profitable coin besides ETH. Mining CFX, you’ll only make 77.7% of the earnings you would’ve made mining ETH. Ravencoin (RVN) and Ergo (ERG) are a close 2nd and 3rd place. However, even these numbers aren’t reliable for post-merge. Take a look at the current hash rates for each of these networks, as of June 7, 2022:
|Coin||GPU Hash Rate*||Network Hash Rate||3090 Equivalent**|
|ETH||0.119 GH/s||1039.13 TH/s||8,732,185|
|GRIN||0.924 G/s||10.92 KG/s||11,818|
|ZEC||35.247 Sol/s||11.41 GS/s||323,715,493***|
|BEAM||58.242 Sol/s||301.4 KS/s||5,175|
|ERG||0.259 GH/s||15.02 TH/s||57,992|
|FLUX||35.723 Sol/s||1.5 MS/s||41,990|
|AE||11.15 G/s||25.31 KG/s||2,270|
|RVN||52.293 MH/s||2.41 TH/s||46,086|
|CFX||96.002 MH/s||1.22 TH/s||12,708|
|*3090 GPU used with slightly tuned-down max settings (0.123 GH/s can be achieved with ETH)
**Number of 3090s needed for total network hash rate
***ZEC is actually best mined by ASICs, so network hash rate isn’t relevant for GPU mining
As you can see, the Ethereum network has a huge amount of hash rate compared with the others. In fact, it’s much more than all of the others combined. When the merge happens, all of that ETH hashrate will go to other networks. Some of it may turn off forever, to avoid running for low profits, but I’d bet a large chunk of it will try to go elsewhere. When you pile all of that extra hash rate onto the other networks, you’re going to swamp profitability and make their current numbers much worse.
The total Ethereum GPU mining network has the hash rate power equivalent to approximately 8,732,185 3090 GPUs (at slightly tuned down max settings). The other coins that can be GPU mined with NiceHash are GRIN, BEAM, ERG, FLUX, AE, RVN and CFX – ZEC is excluded from these calculations since its ASIC mined and too difficult for GPUs to mine.
These other 7 coins have a combined mining network power equivalent to just 178,039 3090 GPUs. That means 49x more GPU rigs are in operation mining Ethereum compared with all other proof of work GPU networks combined. Even if you spread all of those out evenly among the other 7 coins, you’re still going to greatly increase network difficulty on those other coins, which will drastically slash profitability.
Eventually, the market should level itself back out to allow for some amount of profitable GPU mining, but this could take months or more to happen. As miners are unsatisfied with new earnings and decide to shut down completely, their hash rate will disappear and increase profitability for everyone remaining. Nobody will run at a loss in the long-term, so in theory enough miners should give up making it profitable for those that stay behind.
Another factor that could change this environment is token price. The new tokens that everyone starts mining instead of Ethereum are going to have drastically increased transactions and network activity after the merge. This could potentially cause the prices to increase. The more the prices go up, the more miners will be able to use their rigs on it profitably.
There should still be some kind of a future for GPU mining, even if it takes months or more to reach that point after the merge. However, as the network hash rate numbers above will show you, profits are going to be quite horrible after the merge until a very large number of GPU miners quit and/or until the prices increase a lot for other POW GPU tokens.