Bitcoin has reportedly fallen through its break-even cost of mining three times in the last few months. Proof-of-Work (PoW) is now being questioned by skeptics as economically viable. MarketWatch contributor claimed that BTC, with its hashrate drought, is poised to enter into a death spiral – the article went viral in minutes after it was published. The piece has been debunked thoroughly – BTC hasn’t crumbled to dust. This brings us to our piece today – what about Ethereum mining?
Industry analysts have started focusing in on Ethereum and its transaction processing capabilities. Bitcoin was under the microscope – now it seems like it is Ethereum’s turn.
Data gathered by Susquehanna, a quantitative trading group based in Pennsylvania, has claimed that small-scale mining operations aren’t feasible any longer. The reason? Return-on-investment numbers are dismal, with parts becoming more expensive, and with the downturn in cryptocurrency values, the overall return with an average Ethereum graphics-card-powered miner is around $150.00.
With this in mind, one wouldn’t be totally off base to think that miners are starting to drop off and cease their operations completely.
However, DeCrypt Media has stated that “Ethereum Miners are still running strong”. Deutsche journalist Peter Statsenko told Tim Copeland of DeCrypt Media that the price of electricity is one of the reasons why ethereum miners are still plugged in and running. With Ether mining requiring roughly $0.15 per KWH, powerhouse countries with affordable electricity like Venezuela, China, and Canada are prime locations for Ethereum miners.
It is important to note, however, that countries with higher electricity costs do not represent profitable nor logical locations to mine. Japan’s average electricity rate has surpassed $.026 per KWH according to OVOEnergy. This price far exceeds the level of $0.15 per KWH required for Ethereum miners to remain profitable.
Ethereum mining is currently unclear. It’s not sure if current hash levels will be maintained or if the future of mining ethereum itself will be maintained in the future. Currently, many tokens are on the path towards scalability and protocol improvement, including coins like Bitcoin, XLM, and Ethereum. Ethereum’s next major development is called Constantinople. Constantinople is Ethereum’s most decisive upgrade in over a year. The hard fork of Ethereum will bring the token one step closer to its Serenity phase (Ethereum 2.0). This will launch on January 16th of 2019.
Constantinople represents a hard fork that will consist mostly of updates to improve Ethereum’s functionality and ability to move to a Proof of Stake (PoS) model. When Constantinople is activated, block rewards will fall from 3 ETH a block to 2. This will cut Ethereum’s inflation from roughly 6.8% to roughly 4.25%. Eric Conner, an Ethereum proponent, lauds the upgrade by saying this is a “huge step towards near 0% network issuances”.
Constantinople will usher in a new period of worry for current ethereum miners. All we can do is wait and see what happens when Constantinople is activated.
What do you think? Are you an Ethereum miner? What’s your plan for 2019? We’ve got banks wanting to get into the space. We’ve got Bakkt coming in 2019. We’ve got crypto-friendly legislation pending in the United States. Where will you be when the ball drops and the next bull run hits cryptocurrency? Let us know on our Facebook page
