Crypto mining has flourished rapidly for so long as people have profited by managing large mining farms or by contributing a good amount of GPU power to the mining pool. But will that continue after the major switch of Ethereum to Ethereum 2.0? Let’s find out:
The Major Switch of Ethereum to Ethereum 2.0
After long plans and delays, Ethereum successfully switched from Proof of Work (PoW) to Proof of Stake (PoS). Since it has changed to a proof-of-stake model, Etherium mining is replaced by Etherium staking, so using the mining machinery will no longer be used.
As no mining is involved, it has led to miners giving up on GPUs (graphics processing units), and the profitability of GPU mining is decreasing. Thus, after this major blockchain event called merge, crypto miners will no longer be able to mine ETH. But it won’t be the end of mining.
Effect of Transition on Ethereum Mining Pools
The transition of Ethereum to Ethereum 2.0 does not affect the mining pools as much as individual miners because mining companies never generated computing power themselves. They have the human capital and infrastructure necessary to organize the pooling of resources, source new clients, and manage and maintain the operation and its security.
Additionally, they are not dependent on the actual mining or a product. They charge individuals for using their mining pools and follow a business model that has a defined fee structure. This is why the top Ethereum mining pools like Ethermine or f2pool remain unaffected by the shift from mining to staking. They can simply transition to staking pools without being affected by the overthrown mining rigs.
What the Future Holds?
The transition does not mean that mining with die. There are still a few blockchains that run on the proof-of-work consensus and are graphics processing unit (GPU) compatible. So, it is highly likely that Ethereum miners will turn to other blockchains and start mining altcoins to keep their mining operations going. The future of individual miners who were earlier profiting from ETH rewards looks uncertain.
We may see a shift from ETH mining pools to staking pools by miners to compensate for the decreased mining revenues. However, establishing and operating their own staking pools wouldn’t be as easy as maintaining their own mining rigs. Although validation via staking only requires a home PC with stable internet connection, it would also require a minimum contribution of 32 ETH, which is far greater than what most people might have as savings.
It is also possible that the cryptocurrency valuations might rise again in the future. However, right now, things are looking uncertain. We can only wait and watch how things fold.
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