Monday, May 16, 2022

Could GPUs become cheaper after Ethereum mining ends? Here are the 3 points derived from our research

- Advertisement -

For a long time, Ethereum has been planning a Proof of Stake update, and the difficulty bomb (which will make GPU mining exponentially less profitable than it is presently) has been postponed year after year. According to a new blog post by the Ethereum Foundation, ETH is finally ready to make the transition to 2.0. So, does this imply that gamers will be able to buy low-cost GPUs for the first time? Depending on the situation.

best graphics cards banner 100815257 orig 3
Via pcworld.com

On the plus side, GPU mining is dying out:

Ethereum is the largest GPU mining installed base in the world, and the hash rate of the ETH cryptocurrency represents the largest use-case of the technology. GPU mining will become impractical once ETH transitions from proof of work to proof of stake. All cryptocurrency miners have two alternatives at that point. They can liquidate all of their GPUs and convert all of their funds to running ETH 2.0 nodes if they want to stay in the Ethereum game (which is called staking and how you can earn more ETH post-merge).

The rest of the chains are now unprofitable, and the hash rate is likewise low. It’s unknown whether any of these chains will be able to absorb the enormous infusion of additional hash rate (and maintain profit/difficulty) after the merger. It’s possible that when more individuals switch to mining other coins, the total hash rate rises, the difficulty rises exponentially, but the price remains stable, reducing the profitability of these altcoins even more. Miners will receive anywhere from 10% to 20% of the ETH profit in this situation.

1280x720-9

This will result in a flood of dirt-cheap second-hand GPUs flooding the market, causing a price fall (and could also end the semiconductor supply crunch as demand in the GPU market is pretty much killed for a year or two).

ethereum-mining

The downbeat side: After Ethereum, GPU mining has a new champion:

Unfortunately, the cryptocurrency market is unpredictably volatile, and it’s possible that as the difficulty of these coins rises (due to miners shifting to altcoins like RVN), the price will rise in lockstep. These altcoins’ current profitability is shown below, and they have a chance if they can retain even 60% of this profitability post-merge.

Most mines have been operating on quite comfortable profit margins since the current ETH price spike of 2021, thus if miners can preserve close to 60-70 percent of Ethereum’s profitability after the merger, it’s unlikely that they’ll elect to liquidate. If this occurs, cryptocurrency GPU mining will be here to stay.

1603 DSC09732 scaled 1

Our take on the topic:

- Advertisement -

In reality, you’re probably looking at a blend of these two extremes, with some reduction in GPU availability and a price increase in ETH 1.0’s replacement. By June/July 2022, we should see price drops of 30-50 percent, as well as significantly more supply, as some operations liquidate and gamers buy up the GPUs. With the semiconductor industry investing in extra resources, it is evident that the supply crisis will ease sooner or later (think 4 years) and that everyone will be able to buy inexpensive GPUs (well, comparatively cheap; we don’t think we’ll ever see the ultra-cheap sup-$500 GPUs).

Also Read:

- Advertisement -
spot_img

2 COMMENTS

    • Good informative article. Hopefully we see move to Proof of stake for Ethereum soon enough. The GPU prices currently are too expensive.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Related Articles

More To Consider

Stay Connected

13,642FansLike
62FollowersFollow
153FollowersFollow
Boat Lifestyle [CPS] IN

Hot Topics

spot_img

Latest Articles

Trending

Featured

Adblocker detected! Please consider reading this notice.

We've detected that you are using AdBlock Plus or some other adblocking software which is preventing the page from fully loading.

We don't have any banner, Flash, animation, obnoxious sound, or popup ad. We do not implement these annoying types of ads!

We need money to operate the site, and almost all of it comes from our online advertising.

Please add technosports.co.in to your ad blocking whitelist or disable your adblocking software.

×