ETH mining is still highly profitable despite the upcoming ETH2 upgrade

Miners consider lucrative ETH mining payments when the blockchain is in transition. Although there is a schedule to launch ETH 2, the effectiveness of the Minner is still very positive.

Ethereum miners continue to enjoy payments for their efforts in 2021, while the smart contract blockchain platform is about to leave the PoW consensus. Over the past few months, a lot of interesting things have happened in the crypto space, such as Bitcoin, ETH and many others that have seen a significant increase in value. The increased transaction volume and users have also directly benefited the crypto mining ecosystem.

Ethereum miners in particular have reaped significant profits due to the success of decentralized financial (DeFi) projects running on their blockchain. These diverse DeFi platforms have boosted transaction volume and activity on the Ethereum blockchain, leading to skyrocketing fees and increased processing times. While end users bear the brunt of rising transaction fees, miners are pretty happy.

As a result, Ethereum miners hit record revenue of more than $ 830 million in January 2021, levels not seen since the first few weeks of 2018 before ETH, Bitcoin and the broader crypto markets collapsed. spectacular peak of December 2017.

ETH mining is superior to Bitcoin

While Bitcoin stands firmly at the top of the list of cryptocurrencies by market capitalization, BTC miners do not enjoy the same level of return as ETH miners. Philip Salter, head of operations at Genesis Mining says that while ETH mining is “super profitable” at the moment, existing miners and potential newcomers must still be aware of the initial barriers to entry:

“The profit you can make with ETH is much higher than the profit from BTC. However, that doesn’t mean it’s any more beneficial overall. The reason is that the ETH mining hardware is more expensive than the BTC mining hardware, so you have a higher initial cost that you need to break even.”

Salter notes that LTC and Dash mining are also lucrative, but still not on the same playing field as BTC and ETH. All other cryptocurrencies are mined using a non-profitable graphics card like ETH mining.

Pylon.finance’s OxGrimReaper founder also weighs in on the current mining environment and outstanding returns of ETH mining:

“ETH is the most profitable mining opportunity right now, even more so because GPUs and hardware are locked in retail. In addition, it is the Lunar New Year now, which means that no production is taking place in factories in China. The barriers to entry at this point are still as high as they used to be ”.

The founder of Pylon.finance also said that while Bitcoin mining is less lucrative than GPU mining, it is easier to make money, as users can buy ASIC miners. However, GPU mining has various barriers to entry, including the cost of the GPU, the technical knowledge required to set up the system, and operational considerations.

OxGrimReaper also agrees that the success of the DeFi platform has a major contribution to the profits that Ethereum miners currently enjoy. Ethereum gas fees (which are fees paid to miners to process a transaction) have skyrocketed in parallel with the increasing use of DeFi platforms and he says this is a positive sign for miners:

“The front-running bots on AMM are the main catalyst for the gas cost war. But of course, the gas cost war means high costs of doing business. High gas is a great indicator that miners are making money. Gas has hit an all-time high this year, while mining has also hit an all-time high. Additionally, transactions on the ETH ecosystem hit an all-time high this year. These are all strong indicators for a healthy mining ecosystem, especially for those who already have their infrastructure in place. ”

ETH miners have some time to prepare for ETH2

Currently, ETH miners are continuing to monetize fees and high transaction volumes as they maintain the blockchain. Despite the sluggish transition to Ethereum 2.0 in progress, this will signal an end to Ethereum mining when the mainnet merges with the PoS Beacon chain, which was launched in December 2020.

The move away from the current PoW protocol, which Ethereum currently operates, is aimed at making blockchain more scalable, secure, and sustainable. However, it will also cease profitable business for Ethereum miners. While the full transition to ETH2 still has a lot of bright spots ahead, Salter says miners will carefully consider improvements to their operations as the growth of ETH2 continues:

“The Ethereum to PoS migration is potential for a very long time, but it looks like it will take about 2 years. Miners will assess the risk of this happening before they make any investments in new hardware.”

Salter added that the more pressing concern is that the upcoming Ethereum Improvement Plan EIP-1559, which proposes burning a large portion of transaction fees rather than giving it to miners, has a significant effect on the profitability of mining ETH waterfall:

“If accepted, this would result in a significantly reduced mining reward – up to 50% less. Such drastic changes affect the Ethereum ecosystem quite often, creating uncertainty for investors.”

Ethereum’s transaction fees continued to soar in February 2021, with data from Blockchair estimating that the average transaction fee for ETH reached $ 50, compared with an average of $ 30 per transaction by Bitcoin.

Average transaction fees for ETH and BTC | Source: Blockchair

Meanwhile, OxGrimReaper says their operation can be quite easily swapped to mine other cryptocurrencies using GPUs instead of ASICs used to mine cryptocurrencies such as Bitcoin:

“There are more than 10 coins that our GPU can profitably mine without problems. We are doing so right now with the 4G card deprecated on Ethereum. It is mining Ravencoin with some profit. To us, the protocol is not as important as the difference between the electrical and the computed hash rate.

However, commentators such as Lark Davis also known as “The Crypto Lark” emphasized the need for Ethereum developers to expedite the transition to ETH2 and provide users with the opportunity. avoid shockingly high Ethereum transaction fees.

While many users have used DeFi platforms, such as Uniswap and 1inch, to perform simple swaps between multiple trading pairs, the fees for these services and transactions are becoming lofty for ordinary users, making it difficult for newbies to access the DeFi field.

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