Index: At 14:42 on September 15, 2022, Beijing time, the Ethereum execution layer completed the merger with the beacon chain at block height 15537393, and successfully produced a block at the next block height. Congratulations to Ethereum for successfully passing the PoS test . In the same quarter of last year, bitcoin miners at that time were seeking their machines to go overseas because of policy changes. After Merge, the real problems facing Ethereum miners are not only going to sea, but also a way out.
Congratulations on the successful ETH Merge!
1. The era of “gold miners” in which bulls and bears win.
After 2021, the blockchain industry has just experienced an unprecedented violent bull market. Under the tuyere, the myth of making wealth emerges one after another. Or some people hold the coins, buy at the bottom at dusk, sell at the peak, and get a hundred times the return; or some people (mainly industry funds) have invested in several hundred, thousand, or even ten thousand times the project, and the ROI return is quite high; or Some people are good at on-chain Degen, and all kinds of DeFi leading mines can rush in at the first time, and leave the market at a high rate before mining disasters or price collapses;
DeFi protocol TVL statistics Source: DeFiLlama (ps: 2020.06 TVL is only 1.1B, 2021.05 is 123B)
Some people have rich technical background, MEV technology is very good, and they can earn high and stable income by “craftsmanship”; some people even have a very precise grasp of Timing.
Monthly Volume of NFT trading platform Opensea Source: Dune@rchen8
In the past year, a large number of wealth-making myths have been born in the industry. There is no doubt that the protagonists of these stories are more or less lucky. And there is a group, no matter bulls and bears, no matter the price rises or falls, they can get relatively stable daily income (in terms of currency standard), in the glorious days of the past, there is a word that can accurately describe this group, namely “bull” Xiong Yongzhuan”.
Before the birth of Bitcoin (2009.1.3), people usually think of hard work, underground mines and non-ferrous metals when they talk about mining. Compared with mining in the real world, mining in the encrypted world also requires hard work, but the main body of the work is replaced by a machine, that is, PoW – a proof-of-work mechanism.
As the industry leader, BTC and ETH were obtained by PoW before Merge. They purchased a large amount of open space next to the power plant, bought graphics cards, established mining farms, and obtained proof of rights and interests by consuming electricity to produce cryptocurrencies.
Ethereum network block validator Monthly revenue Source: The Block
After the birth of Ethereum, due to its excellent performance and the ability to process smart contracts and other excellent features, it solved the problem of insufficient scalability of the Bitcoin network to a certain extent, thus attracting a large number of PoW miners to join the Ethereum miner army. Described by a popular word, “involution” has begun to intensify, and the mining difficulty and hash rate of the Ethereum network have generally shown an upward trend year by year. In total, PoW miners on the Ethereum network generated nearly $19 billion in revenue throughout 2021. Except for the speculators who “take the offer at a high level”, basically all Ethereum miners can obtain a generous “after-sleep income” every day.
Glassnode: 2016-2022 ETH Hash Rate and Mining Difficulty Statistics
Today’s Ethereum has become half of the cryptocurrency. DeFi protocols, NFT applications, Metaverse, data analysis tools based on the chain, wallet applications, etc. derived from this are even more numerous. At the same time, due to the existence of EVM, many excellent teams have been guided to develop other EVM-Compatible Blockchains. The new chains held the title of the next Ethereum-Killer in a mighty “public chain war” last year, and a hundred flowers of applications bloomed. The contention with the public chains is almost one of the most dazzling performances of this bull market.
Ps: How to describe the real income cycle of miners – many large miners have a path to cooperate with manufacturers and configure their own machines. Generally, three or four months are enough for the payback period. The one that retail investors encounter quickly payback is After buying a machine, the price of the machine or the price of the currency will rise, and the return period will be shortened. The other is the old machine that other people don’t want, and then it happens that there will be a situation where the return of the original is more than a month. In short, just like a landlord with several buildings in the real world, the monthly life is to regularly visit the door to collect rent, and the life of the miners is to regularly withdraw and sell (or some people choose to hoard coins). profit. (narrative from a senior miner)
However, “seeing his building collapsed,” the post-Merge era has come, and this group of “gold miners” suffered “forced demolition” without compensation. According to Bitproit’s statistics in May 2022, Ethereum miners account for 96.72% of the output share of the entire GPU Coins (Messari’s June article reported 97%, and the reference source is also Bitproit, due to price changes and shutdowns, etc., Hence the latter data is taken). After the PoS exam, this huge cake will be completely overturned.
GPU Mineable Coins 05/2022 Source: Bitproit
2. What is PoS, why should ETH switch to PoS?
Like every fairy tale, the dragon slayer eventually becomes a dragon. When Ethereum was born, the founder, Buterin Vitalik, bluntly stated that he was inspired by Bitcoin and aimed to create a “next-generation cryptocurrency and decentralized application platform.” Over the years, today’s Ethereum has not lost the “evil dragon” Bitcoin at that time in terms of waste of resources (power consumption), excessive centralization of large mining pools, and excessive inflation and selling pressure. This encryption giant ship is about to turn.
In the original Ethereum PoW mining method, there is a fatal flaw. Once someone accumulates more than 51% of the computing power of the entire network, they can attack the entire network. In order to gain more accounting power, this As a result, miners have to concentrate their machines or host them in a large mining pool, which not only increases the risk of a 51% control attack, but also violates the core spirit of decentralization at the beginning of cryptocurrency.
The PoS consensus mechanism was proposed in the Bit-CoinTalk forum as early as 2011. In the earliest Ethereum white paper, Buterin also expressed Ethereum’s desire to use PoS as a consensus mechanism, but due to the current technological maturity The problem, PoS at that time was still in the discussion of the concept.
PoS is Proof of Stake, a proof-of-stake mechanism, which can be simply understood as “mining” by holding coins. To change to another description with financial significance, every token holder is a shareholder, and the tokens held are equity. Therefore, the more equity you hold, the more dividends you can get. From the most fundamental output mechanism, the PoS mechanism does not need to consume a lot of electricity to obtain ETH.
Therefore, the PoS consensus mechanism, which is more excellent in terms of environmental friendliness, deflation mechanism, decentralization, etc., was written into the white paper of Ethereum in 2014. After 8 years, the dust cleared and Ethereum ushered in His major upgrade.
Ethereum officially entered the “burning era”
3. Several major assumptions about the response method of the Ethereum miner group
The “way out” for the miners Source: Messari
“The real problems facing the miners are not only going to sea, but also a way out.” As early as June this year, Sami Kassab published an article on Messari describing the major directions of miners after Merge. Here is a brief description of the major directions:
1. Transfer to other PoW tokens such as ETV/ERG/RVN
As has been counted in the previous article, there are still many PoW tokens in the existing crypto market. Except for the leading BTC, as of 8am Beijing time on September 18, 2022, the PoW token with the second largest market value in the crypto world is Doge. Dogecoin, followed by ETC, LTC and Monero. According to Minerstat’s statistics, after Merge, the hash rate of ETC’s entire network increased by 300%, and once exceeded 300TH/s (and then fell back to around 200TH/s).
ETC network-wide hash rate statistics Source: Minerstat
It can be seen that the computing power is honest and profit-seeking, and has made some of its own choices.
Seven-day hash rate growth statistics of some PoW coins Source of statistics: f2pool, etc.
2. Access to a centralized high-performance computing center
Two large public company miners, Hut 8 and Hive Blockchain Technologies, have outlined their post-Merge strategies in advance. Both companies will provide their own computing power to high-performance data computing centers. Of course, for such a “monster”, the transformation is a long one. Acquiring data centers and looking for alternatives quickly is one way they find positioning in this wrangling.
3. Provide computing resources for some Web3 protocols that are native to the blockchain
It will be introduced in detail later, and I will not repeat it here. In short, it is to provide computing power for some decentralized computing power trading platforms or matching platforms, and solve problems in a more blockchain way.
4. Stake ETH to operate a validator node
Running an Ethereum validator node would also be an option available, but like the next option, it is not a long-term solution in terms of revenue.
5. Clear out
(The author adds that this time node is not realistic now, because the market for mining cards is relatively small. According to the description of miners’ friends, around December last year is the best time for miners to escape from the top)
Graphics cards for sale on shopping site Amazon
Ps: Most of the machines’ electricity bills have long been too expensive to shut down, such as 588, etc. Last October-December was the top signal for the best clearing and returning of vending machines.
4. Solve problems in the way of blockchain, and decentralization of computing power may be promising
“When a whale falls, all things are born.” In May of this year, ETH’s entire network computing power was 1.03PH/s. Before the completion of Merge on 9.15, ETH’s entire network computing power was 740.88TH/s, and ETC, one of the largest recipients of ETH’s computing power, also However, it only undertakes about 15% of this part of the computing power. That is to say, a large number of computing power and miners are currently in the wait-and-see stage. They will still wait and see until the decisive direction and the undertaker come out. Therefore, from the demand side From the market point of view, many Web3 decentralized native protocols or computing power matching networks have unparalleled appeal, and the decentralized computing market has ushered in their critical moment.
Render Network (RNDR for short) is a completely decentralized network composed of artists and GPU (graphics processing unit) computing power providers, which can provide global users with powerful rendering functions at their fingertips. In November 2021, the team officially announced that it would migrate RNDR tokens and the main part of the network to Solana (here, cued to the slow speed and high gas fees of the ETH network), in the hope that it will attract more third parties in the future. Use Render’s rendering tools. In terms of product prospects, the rendering network has great development potential and application examples. At the same time, it can also be combined with the vision of the basic tools of the Metaverse track, and the future can be expected.
Livepeer Protocol is a decentralized and highly scalable streaming media layer protocol. Content creators share real-time live broadcasts and are rewarded with tokens (LPT) through video transcoding, which can be used as a real-time media layer in the Web3 stack. In the traditional business world, video transcoding is expensive, and Livepeer’s vision is to dramatically reduce that cost. Anyone with GPU, CPU and bandwidth computing resources can access the protocol, and media staff with relevant transcoding needs can use your computing power. Livepeer Protocol has rich practical applications in application prospects, and the demand for video transcoding will only increase in the future.
Akash Network claims to be the first decentralized cloud computing market, challenging several highly monopolized cloud computing giants such as AWS, Azure, Google Cloud and Alibaba Cloud, aiming to reduce the cost of cloud computing.
The Akash network is currently built on the application chain Cosmos SDK and has its own separate network and blockchain. It just completed its own testnet 3 in March this year. 2,739 verified and trusted participants have generated more than 3,000 transactions. Commit, the final step before launching Mainnet3, further improves the functionality and durability of the Akash network.
Flux is a decentralized cloud infrastructure that can help users better develop, manage and generate Web3 Dapp applications. Flux is a game-breaker in the AWS era. The network itself is permissionless, and it is worth noting that Flux mining is currently based on a model of resistant ASICs, which can be “mined” without the need for powerful dedicated machines. Therefore, it is not only suitable for specialized large-scale miners, but also allows personal home computers to access the network as part of the decentralized computing power (there are relatively complete personal PC mining tutorials on YouTube).
Hamster is a node that can undertake any computing resources from GPU/CPU/Disk. Users can choose to become computing power providers (with computing power), users (use requirements) and pledgers, helping users to quickly deploy any project. According to its official Twitter, it is currently recruiting internal testers for the test network. Github has a high update frequency and is also one of the latest incubation projects of Web3 Bootcamp. The technical fundamentals seem to be relatively good. The operation of the project requires a large amount of computing power access as one of the links, so it can also become a direction to absorb computing power.
CUDOS is a decentralized cloud computing marketplace established in 2017. It is a layer-1 blockchain and layer-2 computing and oracle network built on Cosmos, supporting the Inter-Blockchain Communication (IBC) protocol. The business model is clear, collecting global idle computing resources and connecting to the network, providing low-cost, convenient and fast computing resources for relevant buyers.
CCN has built a Metaverse network, in which users can use their own different types of machines to access the network to mine related tokens, and at the same time earn the native tokens of the CCN network. ETH miners can also mine in the CCN network, and there are also abundant tutorials online.
The direct mining of the ZK system is still in an early stage, but there are already many ideas. Scroll’s co-founder and Paradigm’s CTO have published research in this area. Scroll’s outsourcing mechanism allows Roller to use GPU computing power to generate zero-knowledge proofs for them, which will also be a mining process.
9. Let’s go
The mechanism used by Aleo is Proof of Succinct Work, or PoSW for short, which is a SNARK-based proof-of-work algorithm. The miner processes the pending transaction and calculates a valid random number to solve the simple proof-of-work problem to generate a block. After successfully finding a valid block, the miner will receive Aleo’s block reward.
As mentioned above, the mining of the ZK system has not yet been officially carried out, but because the working speed between the two major architectures of Starkware, Sequencer (executing transactions) and Prover (generating ZK proofs) is far from the same, it also requires a group of miners. of extensive participation.
Judging from the current application examples and prospects, most projects do not have direct competition attributes, which fully shows that in the direction of computing power to undertake the market and the application direction of blockchain, excellent domestic and foreign teams are exploring different perspectives. The cake is still in the stage of continuing to expand.
“The arsenic of others, the honey of mine”, for the Ethereum miners, the computing power generated by the graphics card used to be a hot cake. Low-priced and stable computing power is still on the sidelines and directional. The successful success of Merge is a fallen “Sword of Damocles” for graphics card miners, but for the decentralized computing power market, it is a golden key to open a broad market. The end of the old king, the enthronement of the new king.
References 1. What Will Ethereum Miners do After The Merge? – Sami Kassab 2. Will GPU mining end after the Merge (formerly called ETH 2.0)? – bitproit 3. The Last Miners: 4D Review 8 Years of Ethereum MiningHistory 4. Brief History of Ethereum
Addendum – Interviews with several miners
At the end of this article, the author interviewed several Ethereum miners, including their machine size before Merge, whether to pay back or not, mining time, current state selection and Concern, FYI.
- Miner A: I used to have more than 200 rx588 and L3+ machines. I got rid of these machines in March this year, but it’s not an escape from the top. Although the L3+ is a second-hand phone I bought last year, I’ve already paid for it in two or three months (and All the investment has been paid back, now it is pure profit), the probability of failure is about 10%, there are currently more than a dozen pineapple v1s left, and most of the machines are shipped out. Most of the friends who are still waiting for suitable targets (ETF, ETHW, etc.) have switched to the more stable ETC. Although the income has plummeted, it is very stable. For ta and ta friends, stability is a more important choice.
- Miner B: I used to own more than 300 rx598s. In December last year, I felt that the situation was not right and cleared 90% of the machines. The mined ETH did not return to the original capital. Now there are some profit-generating machines left to mine ETC for fun, but ETC can’t handle that part of the computing power, so he doesn’t plan to continue digging other PoW generations after he understands some suitable blockchain native protocols for access. Coins, ready to access some Web3 protocols that can be degenized to earn related tokens, and bet on the next round of bull market bets.
- Miner C: Senior miner, all the machines will be cleared after 5.19 in 2021, and there is no plan to buy mining machines again.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/closing-and-new-chapters-where-will-the-computing-power-of-graphics-cards-go-in-the-post-merge-era/
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