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The crypto community is following the second most popular cryptocurrency with bated breath. Now all attention is focused on the upcoming change in the consensus algorithm. It is known that Ethereum will switch to Proof-of-Stake (PoS). For some, this is a long-awaited event that promises many prospects for the development of the network and will solve a lot of current ETH problems. However, not all cryptuentusists are so optimistic. Miners are especially concerned, because It is Ethereum that is one of the most profitable for mining coins, along with Bitcoin. “Miners” do not know what to do with expensive equipment after mining ETH on it is impossible.
Briefly about PoS
Proof of Stake is a consensus algorithm based on proof of stake. Roughly speaking, it is necessary to prove the storage of a certain amount of funds in the wallet. This is an alternative method of adding new blocks to the main chain. Now you do not need to have expensive equipment to solve “problems”, since on the Proof of Work (PoW) algorithm, it was the owner of more powerful equipment who had more chances to create the next block. PoS implies that the cryptocurrency algorithm to confirm the next block in the chain is most likely to choose the account on which more coins are stored. This means that any users will be able to participate in ethereum mining, including those with low-power PCs or even smartphones.
However, fans of the second most popular cryptocurrency will face a new problem. For staking and mining, you will need to have an impressive amount of ETH on the account. Accordingly, the goal of network users will be to get as many Ether coins as possible in order to significantly increase their chances of making a good profit.
Why switch to PoS?
With the transition to PoS, the Ethereum Foundation expects to increase the efficiency of the network by 2,000 times and reduce energy consumption by 99.95%. The Ethereum network currently consumes about 44.49 TWh per year. This amount of energy could actually supply a large metropolis.
Gaming video cards are ideal and massively used for Ethereum mining. However, such cards are now in short supply. After the transition to PoS, it will not make sense to use this type of equipment for cryptocurrency mining, because PoS offers a completely different approach to obtaining new coins.
What’s left for ETH miners?
Ethereum miners can switch to alternative projects working on the PoW protocol. It is logical that after the transition of Ethereum to PoS, miners who are now mining Ethereum using video cards will gradually begin to switch to other cryptocurrencies.
There is no doubt that the transition to PoS will affect the entire crypto market. Miners will be the first to face these changes, because ETH mining on video cards used to be the most profitable option. In connection with the transition of Ethereum to PoS, many miners are concerned that they do not see the former income from mining. Many “miners” purchased equipment on credit, hoping to recoup investments with profits from the sale of coins. Now they are in a hurry to sell farms of video cards to recoup at least part of the funds. We asked the experts whether their panic and the sale of equipment in connection with the transition of ETH to PoS is justified and whether the equipment can not be used for profit.
Alexander Lozben, head of ViaBTC in Russia and the CIS, adheres to his position on this matter:
“I don’t think panic can ever be justified at all. If we are talking about Ethereum, then it has been switching to Proof-of-Stake for quite some time. It’s a big mystery to me, why did people buy a device for mining ether, if they knew that there would be a transition to PoS? If the miner has been mining for a long time, then he has already repulsed his investments, so there are no questions to him. Moreover, GPU video cards are used for ether mining, which can always be used to mine other cryptocurrencies and at the moment it is sometimes more profitable than mining ether. But still, the GPU is not industrial mining, it is small, homely, is under great threat. I would not advise people who think of mining as a business to consider these devices for investment.”
Victoria Ustimenko, CEO of THE PR agency PRETOBUSINESS, in turn, noted that mining equipment is evolving, and therefore it is worth waiting for the inevitable movement in this area. This is logical, when a miner buys more efficient equipment, he often sells outdated, therefore, there is nothing unusual in what is happening now.
Maxim Malysh, founder and geneKryptex’s chief executive put it this way:
“The panic of the miners can be understood, but I do not consider it justified. Firstly, the transition of ETH to PoS has not yet happened, mining still brings money. The fall in rates in 2018 (to $ 3,000 for BTC and $ 85 for ETH) was a much more tangible problem. Secondly, when the transition happens, the video cards will continue to mine other coins: ETC, RVN, ERGO. Thirdly, the equipment can be used for other tasks. We at Kryptex already provide the opportunity to rent mining rigs for, for example, machine learning and video processing.”
Igor Chekun, CEO of Xtrey Group, noted that miners should not panic prematurely. The usual method of mining allows you to flexibly approach the choice of mined cryptocurrencies and the algorithms used. As a result, such miners have access to a wide range of cryptocurrencies that can be mined and made a profit, and this circle is not limited to Ethereum. At the moment, other cryptocurrencies may be less efficient for mining than Ethereum, but the situation may change in the future. Do not exclude the possibility that miners on video cards will have comparable alternatives.
The expert also added:
“If the transition to PoS were to take place right now, miners, of course, would lose in profits, so their questions about what to do in this regard are quite logical. Also, the desire of many miners to sell equipment before it falls in value even lower seems logical. However, if we take into account such factors as the uncertainty of the timing of the transition to PoS, the possibility of growth of Ethereum and other cryptocurrencies that can be mined on video cards, then the issue of selling equipment right now is not so unambiguous. “
Vyacheslav Konovalenko, founder and CEO of Syndicate Of Traders, does not see the transition to PoS as a big problem. GPU miners can simply switch their power to other coins, the same ETC, for example, and continue to mine. Of course, due to the switching of power, the difficulty of mining other coins will also increase, but over time this will be compensated by the growth of quotations of these coins.
Dmitry Noskov, an expert of the crypto exchange StormGain, gave his comment on this matter:
“Now, in principle, a wave of panic among miners has swept through the market. This affected the miners of different cryptocurrencies, but especially Ethereum – since the general crisis of the crypto market was superimposed by fears associated with the transition of the project to a new protocol. Now you definitely should not panic and try to get rid of the equipment (especially since it has already become cheaper), you need to wait and see what will happen next, and how it can be used in the future. ”
Timofey Semenov, CEO of Intelion Data Systems, agrees with the opinion of the previous expert. He noted that in the event that the transition to PoS still takes place, there is a possibility of resuming to obtain high profitability for GPU mining (it is used to mine Ether) through the mining of other promising cryptocurrencies in the next one to three years. Therefore, if you part with the equipment, then only partially (for example, retaining 30-50% of the available capacities). At the same time, the expert stressed that each market participant should make the final decision independently, based on his investment strategy.
Renat Kalinchenko, crypto enthusiast, expert of the company “Turov Invest”, shared his opinion with the readers of our magazine:
“In the case of the transition of Ethereum to PoS on video cards, it will be possible to attract other tokens. For example, Ethereum Classic or Cohen Raven token. That is, there will always be tokens that can be attracted instead of ether, so you should not worry about it. Now it is worth the opposite, to grind to the end of the ether, while it is possible, to accumulate it and in the future even it can be thrown into staking. If you have 32 ethers, you can take it. The equipment can always be used, so it is also not worth selling and you need to continue to mine.”
Vladimir Gorgadze, head of the Master’s program “Blockchain” at MIPT, co-founder of the tokenization platform Atomyze and the IT company Newity, believes that Ethereum miners can be understood – not only are they now mining at a loss, but also in the coming months they will probably be forced to switch to mining other coins, even more unprofitable at the moment (see the next paragraph). But there are many other coins on popular mining algorithms (Ethash, Zhash, etc. – everything that is mined on farms with video cards), which have good growth potential, although now they have greatly sunk in value. According to the expert, the mining of such coins “for the future” for a number of miners may be a good solution.
Vladislav Utushkin, blockchain enthusiast, CEO of TTM Group, agrees with tThat equipment and capacity can be switched to mining another coin, the same Ethereum Classic:
“If I were a miner, I would consider the strategy of accumulating Ethereum before the full transition to PoS and after that I would become a validator and already think about selling equipment or switching capacities to another coin. Certainly not financial advice. The news about the transition to PoS has long been floating in the information field and you would know how upset miners are who sold their equipment cheaply when this news first appeared. But they could mine Ethereum all this time.”
Artem Barger, scientific director of the master’s program in blockchain at MIPT, chairman of the expert council of the NC “Idea”, in turn, believes that the current situation and the sale of video cards and equipment for mining are in no way connected with the statement of Ethereum about the transition to PoS. First, we have been hearing such statements for several years. Secondly, the transition process will take some time, and in general, you can always repurpose to mining for the Bitcoin network.
The expert also added:
“Answering the question whether it is possible to reuse video cards in order to make a profit, in my opinion, at the moment there are no computational tasks that would require such power, of course, except for the mining itself. Therefore, it is difficult to imagine how it is possible to repurpose such a quantity of equipment for profit. The only thing I can imagine is the potential benefit for data centers, where virtualization can provide additional tools for scaling to server applications and applications that use machine learning models based on deep neural networks.”
Aaron Chomsky, head of the investment department of ICB Fund, noted that every time during a large-scale correction, some miners are the most inefficient players, stop operations and begin to sell their equipment, so you should not be surprised by the current sales. At the same time, ETH miners should be prepared for the transition of the network to PoS, as a result of which the transaction validation process will take place in a different way – by placing coins on a special deposit, and not with the help of iron. In this case, it is logical to consider the transition to mining another cryptocurrency, if the equipment is not sharpened exclusively for the ETH algorithm. At the same time, the expert stressed that the main problem is that almost all top coins are now working on PoS, while the relevance of PoW is rapidly declining.
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