Blockchain mining was perhaps first made popular when Bitcoin mining started to gain popularity in the late 2010s. After all, mining was the only way to create Bitcoin at first, which was the only cryptocurrency. The idea of completing computational work in exchange for digital tokens that were quickly increasing in value appealed to tech-savvy individuals hoping to establish passive income streams from home. New cryptocurrencies, blockchains, and mining communities rapidly joined Bitcoin.
Ethereum, which operated on a novel type of blockchain and proved to be even more profitable for miners than Bitcoin, was the biggest and most well-known altcoin and is still in use today. Naturally, that drew a crowd of aspiring miners looking to make a quick buck on Ethereum mining.
Your timing is unfortunate if you’re thinking of trying your hand at mining Ethereum. It is no longer feasible to mine Ethereum due to a recent significant modification to the Ethereum blockchain that altered how Ethereum is generated and verified. However, it doesn’t mean you’ve given up on the chance to make money by supporting this quickly growing blockchain network.
Can You Still Mine Ethereum After the Merge?
It’s no longer possible to enter the Ethereum mining market, so keep that in mind if you’re thinking about it. This is a consequence of the foundation-level blockchain shift from Ethereum to what is sometimes referred to as Ethereum 2.0 occurring at a critical time. The changeover, also known as “the merge,” has changed how the Ethereum blockchain works, how it’s maintained, and how tokens are created.
Following the Ethereum merge, validators took the position of Ethereum miners in maintaining the network by staking ETH. The unsustainable energy requirements inherent in conventional blockchain mining made the shift necessary. Utilizing total investors, the switch to PoS dramatically increases energy efficiency. Instead of the energy-guzzling hardware that the traditional blockchain mining trade relies on to operate, validating nodes are used to validate transactions.
Where Will Ethereum Miners Go From Here?
The integration presented Ethereum miners with two challenges. First off, the $4 billion worth of mining equipment that was rendered obsolete by the merger is now locked in the hands of the world’s Ethereum miners. This equipment consists of powerful, expensive, specialized computers and graphics processing units. According to Forbes, mining Ethereum has been so profitable — even better than Bitcoin — that miners continued to buy GPUs and other expensive equipment even while the merger was under consideration.
The events of September 15 ultimately destroyed an $18 billion cryptocurrency mining business, according to Forbes, and sent Ethereum miners all around the world into retirement. Bloomberg announced that Ethermine, the largest provider of Ethereum mining services in the world, was shutting down its servers the day before, on September 13.
Some former Ethereum miners claim they are still unsure of how to proceed since Ethereum made its historic switch from proof-of-work (PoW) to proof-of-stake (PoS). Many people discussed what they thought will happen to these former Ethereum miners on Crypto Twitter after the Merge replaced Ethereum miners. Twitter user Hashoveride tweeted on the day of the merger:
Christian Ander, a former miner, revealed that: “To be honest, I don’t really understand myself. It is by no means as profitable to sell GPU power to other computing-intensive services as ETH was.
Ander continued, “GPU owners are performing research on mining pool and selling power to non-crypto initiatives. I am doing my own research, and my partners are looking into opportunities. They also shut down and sell extra electricity to the grid when energy prices are exceptionally high. Ander declared that he is not currently mining any cryptocurrencies and is merely analyzing the market.
What Can You Do Instead of Mining Pools
Traditional PoW mining is no longer used by Ethereum to create and maintain its blockchain. So, if you’re asking how to start mining Ethereum, you can’t. However, you can take part in its new staking system, which is a validating method. The basis for all blockchain staking operations is Ether (ETH), the native coin of the Ethereum ecosystem. Four methods exist for staking Ethereum:
- Solo home staking
- Staking as a service -Pooled staking
- Staking on centralized exchanges
The level of accountability, incentives, control, and contribution to the blockchain that each approach entails varies, but Ethereum.org views solo home staking as the “gold standard.”
To start solo staking, which is the process of operating an online Ethereum node, you must have 32 ETH in your possession and a deposit. Both a consensus layer client and an execution layer client are present on every node.
Clients are computer programs that collaborate to propose blocks, gather attestations, confirm transactions, and carry out other essential lockdown maintenance duties in order to maintain the system secure.
As a staker, it is your responsibility to run the hardware necessary for the client programs to run. Ethereum(.)org advises purchasing an always-online dedicated computer. You’ll get the biggest monthly benefits if you keep your validator online and operating normally.
You maintain all control while maximizing your earnings, which take the form of additional ETH, thanks to the trustless mechanism that never asks you to disclose your keys.
OK, So If I Can’t Mine Ethereum, How Do I Start Staking?
There are several options for Ethereum staking. Systems for custodial staking manage the entire staking procedure on your behalf. Just make a small Ether deposit, and they’ll set up the node for you.
Additionally, they manage and run the node for you so you don’t have to. The fact that you do not have control over the validator node’s private key is the primary difference between solo and other staking platforms. Your assets are at the control and management of the staking provider.
In return for their assistance, they receive a percentage of your block rewards. Setting up a staking node on the new Ethereum network requires both Ethereum 1.0 and Ethereum 2.0 clients. Applications that connect nodes to the Ethereum network are known as Ethereum clients.
As a basic requirement, users will need a computer with enough memory capacity to download both the old and new Ethereum blockchains. At its current growth pace of about one gigabyte per day, Ethereum 1.0 already holds about 900 terabytes of data. Additionally, validators must always keep their nodes connected to the blockchain.
Consequently, having a solid internet connection is essential. You must pay at least 32 ETH to the Ethereum staking contract address after setting up the validator program on your PC. You must create two keys in order to do this: one for signing smart contracts and validating transaction blocks, and the other for cash withdrawals. However, you won’t be able to generate your withdrawal key until the 2022 merger of Eth1.0 and Eth2.0.
You must first visit the ETH 2.0 launchpad and follow the instructions there before sending money to the staking contract address.This payment serves to confirm your qualification as a validator. Additionally, it gives the network a way to punish bad validators that actively or accidentally damage the trustworthiness of the Ethereum blockchain. The blockchain will “slash” the staked money of the criminals when it discovers irregularities in validator activity.
What To Do With Your Ethereum Mining Rig
Ethereum miners can turn to ETC or GPU-compatible altcoins, since only a few blockchains run on the proof-of-work consensus and are graphics processing unit (GPU) compatible. The influx of miners to the ETC network caused a spike in its hashrate, which determines the computational power of a network. This also resulted in an increase in mining difficulty, which indicates the difficulty of creating a block, and reduced earnings for miners. Ethereum miner Chandler Guo and other developers proposed a hard fork that would retain the proof-of-work mining model. No news yet if that hardfork for EthereumPoW is now a reality. Some big Ethereum mining pools are expected to support EthereumPoW (ETHW), and it is possible that some miners will opt for the proposed Ethereum fork. Meanwhile, Coinbase has confirmed that it would consider listing forked Ethereum. So, you might wait for the ETHW hard fork.
Conclusion
The Ethereum consensus algorithm’s fundamental mechanism is called Proof of Stake (PoS). For those who are unaware of this shift, Ethereum switched over to the PoS mechanism in 2022. Where now Ethereum blockchain operates on Proof of stake (PoS) consensus algorithm. This technique is thought to be less energy-intensive and offers a foundation for introducing new scaling solutions.
Blockchain networks are protected via a consensus technique called Proof of Stake (PoS). All blockchains are built on consensus mechanisms, which act as the network’s governing principles.
