The two factors of the conversion of Ethereum to PoS and the stoppage of mining on 4G graphics cards make the doubt of "how long can Ethereum be mined" almost run through the entire 2020 of graphics card miners. The prospect of Ethereum mining also always seems to be re-asked with the latest news coming from "2.0". Today, the initial stage of Ethereum 2.0 will kick off, and mining on the PoW chain will continue as usual. How should miners view the trend and how should they deploy it?

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Progress and layout: The "threat" from Ethereum 2.0 is still far away

How long can Ethereum be mined? Many miner friends have been asking this question, and it seems that they have never found a clear answer. Not only that, but every "2.0" progress update will bring a certain degree of anxiety, which is actually unnecessary. Although the time frame that can be given at present is relatively broad, we should make it clear that the key point that affects the judgment of mining lies in the development progress, that is to say, "how long you can mine" depends on "when the PoW chain and the PoS chain will merge".

Eth1 is the PoW chain that miners have been participating in, and Eth2 is the Ethereum 2.0 of the PoS consensus. After the merger of Eth1 and Eth2, the PoW mining of Eth1 will stop, and the consensus upgrade of the entire Ethereum network will be completed. The realization of the entire "consensus upgrade" process requires the parallel development of Eth1 and Eth2, and each of the two chains has its own schedule.

As you have heard frequently, Eth2 is divided into phase 0 (beacon chain, a PoS main chain), phase 1 (data sharding, 64 shard chains), and phase 2 (transaction processing sharding). The expected time for the merger of the two chains to occur is at stage 1.5. Eth2 has confirmed that it will arrive on December 1st, when it will enter phase 0 of the main network, and because phase 0 is not yet available, any economic activities of Ethereum will still run on Eth1, and the underlying consensus still depends entirely on PoW mining decisions.

Why is Eth1 still being developed? Not only for the normal survival of the entire Ethereum ecology, but also to support the various stages of Eth2. In order to achieve the merger of Eth1 and Eth2, that is, the complete transition of existing economic activities, Eth1 needs to be able to communicate well with Eth2, such as the blockchain witness mechanism, changes to the current Ethereum virtual machine, and change the data structure from Hex to binary and so on work. To merge Eth1 into Eth2, change Eth1 from a consensus bottom layer to one of the shards closer to the user layer, and realize remote calls between the two chains, a lot of development work is required.

The development of the existing Eth1 is not a small project, and the architecture of the new consensus of Eth2 is not easy. Although there may be new alternatives for the merger of Eth1 and Eth2, the Ethereum Developers Conference also stated not long ago that Phase 2, which seems to be a more distant stage, has been put on hold for the time being. It can be seen that no one can guarantee the market value of 60 billion Huge systems above USD that face consensus changes enable simple and fast changes.

Judging from the current planning time, Phase 1 may wait for 1-2 years, and the "expected" delay seems to be a common occurrence in various blockchain projects. A highly scalable and fully available PoS Ethereum may experience a longer wait time.

The interests and positions of all parties involved in the transformation of the consensus are still parts that need to be crossed. In addition to the consideration of miners’ mining income, a more practical question is whether the Eth2 code can safely undertake the existing DeFi projects with a lock-up value of more than 13 billion US dollars? The transition of wallets, exchanges, stablecoins, and many infrastructures will take more time.

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Incentives and benefits: considerable output value and relatively stable block rewards

Ethereum consensus transition, how will mining revenue change? This is another confusion about mining. How will earnings change? Simply put, it is "to be determined", and there is no proposal that has been widely discussed and approved.

Let’s look at block rewards first.

The Ethereum protocol itself does not have an automatic production reduction mechanism like Bitcoin, but it is achieved through the deployment of EIP (Ethereum Improvement Protocol) during the hard fork upgrade process. After the two upgrades of Byzantium in October 2017 and Constantinople in February 2019, the Ethereum block production was reduced respectively, from 5 ETH to 3 ETH, and then from 3 ETH to the current 2 ETH. Therefore, whether Eth1 will carry out targeted production cuts after Eth2 goes online also needs to be determined through proposals, discussions, and deployments.

The main purpose of Ethereum’s previous block production cuts is to adjust the supply and reduce the inflation rate. As for the production reduction intended to limit mining and transition consensus, there are no widely discussed proposals. EIP2878 proposed to reduce the block reward from 3 ETH to 0.5 ETH. It was discussed for a short time, but because the idea was too radical, it received a lot of criticism, and the chance of implementation was quite slim. And even this radical proposal to cut production by 75% is only related to benchmarking the inflation rate of Bitcoin and increasing the purchasing power of Ethereum.

So will the gas fee income change?

In terms of the interests of miners, the community focuses more on the adjustment of Gas fees. EIP1559, proposed by Vitalik as early as 2018, aims to make the gas fee market more predictable and reduce network congestion by setting the same basic rate for transactions and burning gas fees. Not to mention the reduction of miners’ income, but only regarding the feasibility of EIP1559 and whether it can really promote the development of the network, there are many objections or voices of doubt in the community, and some serious economic analysis is also being carried out. Implementation is still some time away.

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Data source: Coinmetrics.io

Taking a step back, even if the gas fee of the miners is greatly weakened, will it really significantly affect the mining mentality of the miners? We know that the DeFi boom has significantly increased the proportion of miners' income from handling fees several times, and this kind of situation where miners "lie and earn" is rare in Ethereum mining for many years, and mining income is still the main income Source, not gas fee.

In the ETH "gold mine", what is the mining potential?

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Data source: F2Pool PoW leaderboard

According to the PoW ranking list of the F2Pool website, the daily output of Ethereum exceeds 6.7 million US dollars, which is more than 10 times that of the third-ranked Litecoin. When Vitalik answered the question about the supply of ETH tokens in the recent AMA, he said that in the next 1 to 2 years, the annual supply of ETH will be about 4.7 million ETH. This figure is consistent with the current annual supply. Even if the transaction gas fee is not included, the "post-Ethereum era" after phase 0 is still a mining treasure full of temptations.

The "coin price" is still the key point to determine the behavior of miners. The launch of Ethereum 2.0 has objectively promoted the long-term value of ETH. Coupled with the entry of Grayscale and more institutions, rushing to dig, hoard coins, and use graphics card computing power in exchange for "chips", a bullish secondary market is miners A strong driving force for "overweight".

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The choice of miners: update equipment, stick to the base camp of Ethereum computing power

What attitude should the miners take to deal with this Ethereum consensus conversion upgrade? F2Pool COO Da Yu pointed out that Ethereum 2.0 is carried out in stages, but the process of converting consensus has been delayed again and again. It is recommended that the miners who have already participated continue to mine steadily. If you invest in a large scale, you can calculate the payback period of mining according to the situation At present, it should be visible that PoW mining will continue for two years.

Upgrade equipment. With the arrival of Eth2, the DAG file of Eth1 will be full of 4G. For miners holding 4GB graphics cards, it is time to upgrade their equipment. Graphics cards that have not been upgraded are forced to withdraw from the Ethereum mining market. From the perspective of income, many miners can only choose some networks with relatively low income. The flow of a large number of 4GB graphics card computing power into a small-scale network will also increase the difficulty in a short period of time, lower the income, and further reduce the output of equipment. And if you upgrade the equipment, you can continue to occupy the main position of graphics card mining.

Zhang Songqing, the co-founder of minerOS and a big graphics card miner, shared with F2Pool that he has completed the upgrade of the machine during this round of currency price rise, and the replacement of the old generation of graphics cards has better success and power consumption ratio and the ability to resist risks Stronger next-generation graphics card.

Zhang Zhenyu, a major graphics card miner, also shared with F2Pool that the graphics card equipment has been updated, which is basically 5700XT or equivalent equipment. He believes that the mining equipment of Ethereum will be greatly improved in the first half of next year, and new ASIC mining machines will appear.

For users who already have equipment, it seems more secure to change the card. The cost of continuing to "get on the car" is smaller, and it can increase the second-hand value when it is sold in the future. From the point of view of the upgrade method, some graphics cards like P104 only need to refresh the firmware, and other graphics cards such as RX470, RX480, RX570, and RX580 need to be upgraded by hardware. 1GB of video memory particles, which is what miners often discuss recently.4G to 8G”。

Diversified layout. Graphics card mining is different from professional mining machines. It has the characteristics of adapting to multiple networks and switching between different networks. This seems to affect the thinking of miners' diversified layout to a certain extent. "From a longer-term perspective, when the PoW chain is fully incorporated into Ethereum 2.0, there is currently no network that can replace the computing power of Ethereum," Zhang Songqing said, "While updating hardware equipment, lock-up will also be considered. The PoS chain is used as a verification node, and it is currently deploying things other than mining to diversify its development.”

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Ethereum mining, keep on boarding!

After understanding the development progress of the network, mining revenue, and various options for miners facing consensus upgrades, let us once again look forward to the Ethereum and graphics card mining market from the current situation of the hardware market.

Observing this year's graphics card market and future trends, Zhang Songqing believes that the short-term demand for graphics cards basically depends on the chip production capacity that can flow into the mining field. Judging from the rise in currency prices, the increase in computing power has not yet fully caught up. "The willingness of miners to increase computing power is quite strong at present, mainly due to the shipments of AMD and NVIDIA, and the computing power will not increase much before the end of the year." He believes that because graphics card manufacturers are still relatively cautious about the mining industry, most Miners can only purchase graphics cards in the market, which can restrict the excessive concentration of computing power to a certain extent. "But generally speaking, there are more graphics card miners with more than 10,000 units this year, and there will be more and more computing power predators in the following year."

Regarding the computing power of Ethereum, Zhang Zhenyu is optimistic about the overall upward trend of computing power, and believes that "next year will definitely be a magnificent year for Ethereum mining." It can be dug up, at least three years or even longer." Not only that, "some new ASIC mining machines of well-known mining machine manufacturers have entered the tape-out production stage", due to the expectation that the scale of computing power will continue to rise, in While fully reflecting the enthusiasm of Ethereum PoW mining, it will also make the competition more intense.

Generally speaking, we can see that although the Ethereum 2.0 phase 0 mainnet will be launched, the atmosphere for continuing to mine and hoard coins is still high. Whether it is the improvement of Eth1 or the change of Eth2, when it comes to applications, expansion, and future trends, people's eyes and topics are still focused on "Ethereum", the world's largest smart contract network, which is exactly what supports the continuous growth of computing power. value engine.