Ethereum mining disappears. Not today, not tomorrow, not next week, probably not even in the next few months – but that will eventually go away in the near future.
The Ethereum network is in the process of moving to ETH 2.0 and with this it is phasing out mining and replacing it with Proof of Stake (PoS). There is even a threat that ETH 1.0 will switch to PoS before ETH 2.0 launches full. The most immediate concern for minors is EIP1559, an Ethereum improvement proposal to address the fee structure and make ETH more rare.
What does this mean for Ethereum mining?
On a positive note, there are plenty of upcoming events that miners can prepare for. The downside, however, is that Ethereum miners are more or less guessing and waiting to see when these changes hit them.
I am an Ethereum miner.
In 2020, I built an Ethereum mining rig for less than $ 1000. Good luck with that in 2021. With COVID, the cryptocurrency bull market and FOMO’s latest efforts to mine ETH before the PoS hits, mining start-up costs have increased significantly. It’s hard to get your hands on the GPUs and other (reasonably priced) parts needed for mining.
Due to the upcoming changes to Ethereum, I have also started to look into other mineable cryptocurrencies like Ravencoin. Currently I am doing a spec mining of Ravencoin, adding to my RVN holdings as it is one of the most profitable coins at mine. I foresee a surge in the price of RVN over the next year. Similar to Bitcoin, Ravencoin has built-in halving events and one of them will arrive in January 2022.
A rise in the price of Ravencoin is not a guarantee. I only operate it as a hedge in case it grows. Alternatively, this is a coin that will be mineable on my platform once Ethereum is no longer mineable.
Ethereum is very profitable for mine at the time of writing. Despite threats to miners getting off the pipeline, gas costs remain high, ETH has hit unprecedented unit prices in recent weeks, and the global crypto market is hot. Even volatile fluctuations in the price of ETH tend to work in favor of miners. In a wild market, miners can take advantage of it.
All of this will change. EIP1559 will be the first big test. We’ll know more in June or July about the impact of the improvement proposal on Ethereum mining, and then we’ll have to wait and see how that plays out once it’s implemented. Currently, ETH is very profitable for mine. Just like other cryptocurrencies like Ravencoin.
When ETH is no longer profitable to mine or even exploitable at all (sometimes much later), it doesn’t just mean that other cryptos like RVN will automatically remain profitable.
It will be essential to watch where all the ETH hash power goes once Ethereum is no longer profitable and ultimately not mineable at all.
It sounds like an apocalyptic speech.
It’s not such a pressing issue, but it’s crucial to understand what’s going on in cryptocurrency mining right now if A) you are an existing minor or B) you are interested in getting into mining.
I mentioned the high start-up costs in 2021.
COVID and the crypto bull market have both contributed greatly to an increase in demand for graphics cards, computer parts, ASIC miners, and just about anything you can do at home when it comes to tech. This meant that it was more difficult to obtain the necessary parts build a mining platform. I was fortunate enough to get mine going just before the bull market hit. Now it has been a challenge to upgrade my rig because the parts are hard to find or are extremely over priced.
You can buy used parts from places like eBay or Craigslist. You might even get lucky in some lotteries with big stores like Best Buy or Newegg. I added myself to the notification list directly from companies like EVGA whose graphics cards I currently use. If you go the second-hand route to buy GPUs or other parts, you’re looking for prices 2 or even 3 to 4 times what you would normally pay. It is difficult to justify paying these prices.
The shortage of chips and parts also means that if you are in Group B (looking to get into mining), now is not the perfect time to start. You have expensive coins that are hard to find and the prospect of Ethereum phasing out mining as we speak. Even if other cryptocurrencies will of course remain exploitable, the ETH transition will have ripple effects. There is also a chance that the chips and coins market will reopen later in the year, especially if ETH miners abandon their GPUs and platforms if ETH becomes less profitable to operate. . I also hope that Nvidia and other chipmakers meet demand as the world recovers from the pandemic.
Take the example of Ravencoin. Many Ethereum miners simply say that once ETH becomes less profitable or can no longer be mined, they will simply switch to Ravencoin. While this is probably what they can and will do, that doesn’t mean Ravencoin will be as profitable as it is now.
As miners flood the network on a new coin like Ravencoin, there will be more hash power on that network and the difficulty will increase, making mining of Ravencoin less profitable than we might expect.
It’s hard to say what these scenarios will actually look like until they happen. This is part of the reason why I went ahead and started mining Ravencoin in anticipation of the transition to it later. Mining now allows me to grow my RVN holdings, familiarize myself with the mining pool I am using, and see how my graphics cards are performing. I’m mainly looking to improve my knowledge of the Ravencoin network in case I move the bulk of mining from Ethereum to Ravencoin later this year.
Let me put my approach to Ethereum and crypto mining in context. First and foremost, I am a Bitcoiner. I discovered Bitcoin in 2013, but I only bought my first BTC in 2015. I was hooked though. I found ETH sooner after in 2016 and was fortunate enough to buy ETH at $ 12. Bitcoin and Ethereum are responsible for the bulk of my cryptocurrency holdings. You can even take a look at my crypto wallet from May 2021.
I started mining Ethereum because I was much more at home due to the global pandemic and because I wanted a more tangible way to get involved in cryptocurrency besides investing.
I wrote on build my Ethereum mining rig here then follow up with why i started mining in the first place. Check out both articles if you want to learn more about my journey in crypto mining. I also provide a full parts list in my original build article if you’re curious about what goes into a rig.
It is essential to note that I hold ETH but the dominant position in my crypto wallet is BTC. Like I said, I’m a Bitcoiner first.
My goal is to increase my Bitcoin stack. I will probably continue to hold some ETH even when Ethereum mining goes away, but my ETH stack will continue to shrink compared to my BTC stack. Part of the reason I mine crypto is to increase my stake in BTC. I don’t own 100% of ETH I mine. I mine in a way that makes it easy to convert all rewards to BTC – that means mining directly to a wallet that allows me to convert.
This is also to say that when I finally stop mining Ethereum, I will have the same approach to Ravencoin or any other crypto I could mine, like Ethereum Classic. I can’t promise that I will just mine another coin and keep it. With Ravencoin I’m slightly bullish as it nears its halving in January 2022. I think there is a chance that the price will rise as we get closer to that date, but nothing is definitive. I also can’t say that I won’t convert at least some of my RVN I to BTC.
The state of crypto mining in 2021 is changing rapidly. It’s a dynamic situation with a lot of moving parts. Right now, if you are already a minor, now is the perfect time for mine. There’s nothing like seeing mining profitability stay high AND the price of your mining coins going up in tandem. The all-time new highs for Ethereum have made things even better. The Bitcoin and Crypto Bull Market, with Theories of a Bitcoin Supercycle being tossed around, bring more money and attention to cryptocurrency. But, everything changes too.
Keep an eye out for upcoming upgrades to the Ethereum network. ETH 2.0 will reshape both Ethereum and the rest of the crypto mining space. These changes, along with the way things are going in the chipmaking industry, will change the landscape for new miners and for those looking to expand their mining business further.
Let me know what you think about the state of the GPU and even ASIC mining right now. Are you a crypto miner? Are you interested in getting into mining? If so, what strategies are you taking to secure the parts and keep your upfront costs low? I am also happy to provide you with all the information I have. Thanks for reading my post! If you want more content like this sign up for my newsletter.