Death of GPU Mining? Popular crypto profits go negative as Ethereum miners flood the market
The mining profits of the PoW cryptos have gone negative after the Ethereum merger as ETH miners flood the hashrates of these other coins.
Mining profits of popular proof-of-work cryptocurrencies such as Ethereum Classic Crater after the merger
A couple of days ago, the long-awaited ETH merge finally arrived and transitioned the network to a PoS-based consensus mechanism.
Since proof-of-stake chains do not rely on miners for hashing blocks, every miner associated with Ethereum was left without their entire earnings.
Some of these miners have sold their mining rigs to exit the market, while others have switched to the remaining proof-of-work networks.
However, there is one problem with miners switching to other coins, and that is that all the PoW cryptos that use graphics cards for mining (that is, the ones other than Bitcoin) had magnitudes less hashrate than ETH had before the merger.
It is a general concept of mining difficulty across crypto chains, where the network adjusts the rate at which miners can hash new blocks according to the overall hash rate. Usually, coins increase in difficulty as the hashrate increases to balance things out and keep the block production rate nearly constant.
A flood of GPUs previously used for ETH mining suddenly entering these other, significantly smaller hashrates will therefore result in a difficulty explosion.
Here’s some data from crypto mining calculator site WhatToMine that shows where the profits of the PoW coins with some of the biggest market caps currently stand:
No crypto in the list is offering positive mining profits currently | Source: WhatToMine
As you can see in the table above, Ethereum Classic, the coin that is currently the most popular mining option on the market, is giving miners a profit of -$0.78 per hour right now. This figure assumes an average electricity price of $0.1 per kWh, and uses the hash of three AMD RX 480 graphics cards to make the calculation.
Even with the strongest GPU available on the market, the 3090ti, ETC mining hourly profit remains in the negative at around -$0.50.
As some already speculated before the merger, it appears that there was no crypto with a hash rate and market capitalization large enough to absorb the ETH miners, who made up the vast majority of GPU crypto miners out there.
It is possible that a PoW coin could rise in the future to become large enough to host comparable amounts of hashrate as Ethereum once did, but for now it seems that graphics card-based mining may be dead.
ETH price
At the time of writing, Ether’s price is hovering around $1.4k, down 6% in the last week.
ETH value tumbles down | Source: ETHUSD on TradingView
Featured image from GuerrillaBuzz Crypto PR on Unsplash.com, chart from TradingView.com
