Crypto mining is approaching a key inflection point
Source:https://techcrunch.com/2022/03/28/crypto-mining-is-approaching-a-key-inflection-point/ Crypto mining is approaching a key inflection point 2023-01-20 22:59:00

The crypto mining space is approaching a key inflection point. There are currently two dominant proof of work-based coins, Bitcoin and Ethereum. Bitcoin’s consensus rules are immutable and historically have not been able to be altered by some of the largest exchanges and miners in the space.

Ethereum is constantly changing, and the biggest change could come as soon as Q2 2022.

What does ETH 2.0 mean for crypto miners?

Ethereum is expected to transition from a proof of work-based consensus protocol to proof of stake (PoS), which means that graphics card miners will no longer be useful for adding blocks to the Ethereum blockchain.

However, the Ethereum community has been discussing this transition since 2016, and it continuously gets pushed back. During the Ethereum Core Devs Meeting #124 on October 15, a proposal to push the December 2021 “difficulty bomb” was discussed.

Given the specialized nature of Ethereum mining, it would be our bet that those miners will leave the market completely.

The difficulty bomb exponentially increases mining difficulty at a certain block height, and it essentially freezes the chain and forces a hard fork. The difficulty bomb is now estimated to occur around June 2022, and many in the community expect the transition to proof of stake to finally occur.

When this transition occurs, it will be very destructive for miners who are currently mining Ethereum. These miners will have to transition their graphics cards to mine other coins that are profitable with their equipment, and those coins are significantly smaller than Ethereum, in addition to likely being less profitable to mine. It is very possible that if this transition to PoS does occur as recently announced, the graphics card market will be flooded with cheap used chips from miners.

What this means for crypto miners is that Ethereum miners have a very high risk that their machines become obsolete overnight. Their cash flows would immediately dry up, and the resale value of their GPUs will drop significantly. Knowing this risk, a large majority of capital being deployed into crypto mining is going into Bitcoin mining, specifically.

Tech, Technology Source:https://techcrunch.com/2022/03/28/crypto-mining-is-approaching-a-key-inflection-point/

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