Indian crypto miners worried as Ethereum moves to Proof-of-Stake

The merger will take full effect starting September 15, when Ethereum changes its underlying algorithm that validates (verifies) transactions. That will force the network’s mining industry – which, according to research firm Messari, is worth $19 billion – to find other ways to make money. The current mechanism, PoW, requires specialized computers to verify every transaction that occurs on the Ethereum blockchain.

“What’s happening to our GPUs?” asks 23-year-old Pawan Hegde, a Mumbai-based crypto miner who only mines Ethereum on his NVIDIA and AMD graphics cards. “This is a matter of concern, after all it is a $19 billion issue,” he says.

Crypto miners run GPUs, for which they are rewarded with some Ethereum, in the form of incentives. After the merger happens, crypto miners will no longer be required to use the GPUs to confirm transactions. Instead, they have to stake some of their crypto into a mining pool, which will only run a single unit. “I don’t see any other option, I can sell my GPUs and put an end to mining,” says Pune-based cryptominer Sarthak Jain, 32.

The big question is what team Ethereum is the best cryptocurrency to mine. It is because of an algorithm called “Ethash”, which makes mining much easier than other coins like Bitcoin. “Ethereum mining is always profitable even with a regular computer, on the other hand, Bitcoin mining uses specialized ASIC computers which are a burden to acquire,” adds Hegde.

Some miners are also looking for other business options that require computational power and put an end to the crypto mining business. “Even if we could mine other tokens like Ethereum classic (another Ethereum token that will continue to work on PoW), but the biggest concern is that the profitability will go down by 10 times,” Pardeep Narwal, founder of New Edge Soft Sol , a Rohtak-based IaaS firm told indianexpress.com.

The main concern raised by miners is that PoS is not fully decentralized. “Anyone willing to stake (put their cryptos into a pool) will have the power to verify transactions now,” Narwal added.

Crypto miners also believe that PoS could lead to centralization of the blockchain ecosystem as they would be able to stop a particular address from transacting on the blockchain. “While this may reduce crypto fraud to some extent, it will centralize the crypto business, something that the underlying technology, i.e. blockchain, aims to eradicate,” notes Hegde.

Another crypto miner, Jyotirmay Ray, claims that while “profitability will decrease, so will energy consumption”. He believes that “cards (GPUs) required for mining will never be useless.” He adds that he will now move to other coins such as Argo, Pearl and Ethereum Classic. “Nothing beats Ethereum, but there is no doubt that PoS will impact the crypto mining industry and only the future will decide our fate.”