with the ethereum merge finally complete, many miners are left wondering what to do with their ethereum mining equipment.
What is “The Merge” and how did it affect Ethereum mining?
The merge was an Ethereum hard-fork, in which two distinct protocols were created from a controversial upgrade to the Ethereum protocol. The protocol that was changed retained the name “Ethereum,” and transitioned to the Proof-of-Stake consensus mechanism. The other protocol, now known as “ETHPoW,” retained the original Proof-of-Work consensus mechanism.
Influential on-chain actors such as stablecoin issuers and DeFi protocols largely opted to operate on Proof-of-Stake Ethereum. ETHPoW, while a functional and active protocol, now has a significantly smaller active user base than Proof-of-Stake Ethereum.
Ethereum’s transition to Proof-of-Stake immediately replaced Ethereum miners with Ethereum “validators” who lock up a “stake” in ETH for the opportunity to propose blocks in their designated slots. Block rewards, which were previously awarded to miners, were significantly reduced in an attempt to achieve deflation, and are now awarded to validators.
What can I do with my Ethereum mining rig?
Former Ethereum miners are now unable to mine Proof-of-Stake Ethereum to receive block rewards. The Ethereum hardware rigs that were used to mine, however, can still be used for a variety of purposes.
Ethereum operated on the Ethash hashing algorithm prior to the merge. Ethash was originally designed to be optimized for consumer hardware and resistant to application specific integrated circuits (ASICs). However, Ethash ASICs do exist and are widely distributed.
If your Ethereum mining rig is application-specific (an ASIC), then your Ethereum mining rig can only be used to mine other Proof-of-Work cryptocurrencies that use the Ethash hashing algorithm. Other cryptocurrencies using Ethash can be looked for here.
If your Ethereum mining rig is not application-specific (e.g. GPUs), then it can be used to mine any other Proof-of-Work cryptocurrency. However, it is important to note that just because your rig can mine any other Proof-of-Work cryptocurrency does not mean that it will be competitive. Bitcoin, for example, requires application-specific rigs to mine competitively.
What are the best alternative cryptocurrencies to mine?
There is no clear answer to this question, due to the many factors that impact mining profitability. Some ETH miners have continued to mine ETHPoW, while others have migrated to different ecosystems seeking better returns.
The profitability of mining a cryptocurrency depends on five factors:
- How much your rig costs in electricity
- How much hash your rig can produce
- How much total hash is mining the cryptocurrency
- How much the block/fee reward is worth
- How liquid is the cryptocurrency
Energy price is independent of which cryptocurrency you choose to mine, so we’ll focus on the remaining 4 factors. The most profitable cryptocurrencies to mine are those that your rig can hash efficiently, that do not have an excessive amount of hash competing with you, and that are highly liquid. Of course, with the current popularity of mining, finding such a cryptocurrency can be impossible. However, it can help you compare against multiple cryptocurrencies to determine which will be more profitable for your unique circumstance.
For example, with a GPU rig, it can be immediately known that mining Bitcoin is not profitable by examining these characteristics. While mining a single Bitcoin block provides a high payout and Bitcoin is extremely liquid, the proportion of hash that a GPU is able to contribute compared to the total hashrate securing Bitcoin is negligible. In contrast, even though mining a network like ETHPoW might allow a GPU to contribute a meaningful amount of hash compared to the total network hash, the lower block/fee reward of finding a block and the shallow liquidity of ETHPoW may be insufficient to offset electricity costs.
In conclusion, there is no single “best alternative cryptocurrency” to mine, but there is a way to pick one based on your hardware and electricity costs. To find which currencies may be best for you, you can check here.
How do I mine a Proof-of-Work protocol?
The process of mining a Proof-of-Work protocol can differ based on the currency, but generally certain steps remain the same. Once you’ve selected a currency to mine, you can point your miner at a node. If you’re solo mining, this will be your own node. If you’re mining in a pool, you’ll point your miner at one of the pool’s nodes.
Once you’ve pointed your miner at a node, the next step is to start generating hashes. This process generally involves setting up some kind of mining software for the algorithm you will be mining. In Quai Network, for example, different mining software exists for different types of mining rigs, with distinctly different software for CPU miners, Nvidia miners, and AMD miners. Be sure to ensure that the mining software you are using is compatible with and optimized for your hardware.
Join us to build a better blockchain.
Quai Network is an open-source Proof-of-Entropy-Minima blockchain network utilizing the capabilities of merged mining to increase throughput and security. Users of Quai Network will enjoy fast transaction times without compromising decentralization and security. Miners will have competitive mining opportunities across the many blockchains within the network.
Capable of thousands of transactions per second, the Quai Network is a new solution to scalability that is soon to be ready for mainnet release.
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