Now-redundant, Ethereum miners are flocking to other proof-of-work tokens after the network switched to a proof-of-stake consensus mechanism and finding slim pickings.
Ethereum miners are finding it increasingly hard to make money after the Merge as too many of them are switching to alternative coins, crushing mining profitability.
Earlier Thursday, Ethereum, which is the world’s second-largest blockchain network, switched its consensus algorithm to proof-of-stake from proof-of-work in order to boost efficiency and lower energy consumption. However, the software update – dubbed the Merge – also meant that miners were no longer needed to secure the network, and so rig operators moved their machines to other PoW blockchains.
“Graphics processing units (GPU) mining is dead less than 24 hours after the Merge,” tweeted Ben Gagnon, chief mining officer at bitcoin miner Bitfarms (BITF). The three largest GPU chains have very low profits, and “the only coins showing profit have no market cap or liquidity,” he added.
The hashrate, or computing power, used to mine PoW altcoins like ethereum classic (ETC) and ravencoin (RVN) doubled in the hours after the Merge took place. Alongside a rising hashrate, however, is rising difficulty, meaning miners are less likely to successfully mine a block and reap the block reward.
The reward for mining an Ethereum Classic block about 24 hours ago was ETC 0.0186484, or about 70 cents, but a check in the past hour found that’s tumbled to just ETC 0.00030658, or about 11 cents, according to data from Minerstat. Similarly, RVN miners could earn RVN 30.28478584, or $1.77 per block 24 hours ago, and in the past hour, that’s dropped to just RVN 0.82968431, or about 5 cents.
“As suspected, too many ETH miners switched over to ETC,” Ethan Vera, chief operations officer of mining services firm Luxor Technologies, tweeted on Thursday.
“Even running new generation hardware at sub 3 cent power is not profitable on ETC now … That electricity price is much lower than what households in the U.S. pay, and even to what industrial consumers like bitcoin miners pay in several parts of the country.”
Vera estimated that 20%-30% of ethereum miners have migrated to other networks, with the rest of them simply shutting down.