Ethereum’s Switch to PoS Could End GPU Mining as It Currently Controls 97% Of GPU Mining Activity
- Ethereum to switch from proof-of-work to proof-of-stake.
- The Ethereum mining hardware is not compatible with bitcoin mining devices.
- The shift will lead to low gas fees.
As the Ethereum Network gears up to move from the existing proof-of-work consensus algorithm to the proof-of-stake, concerns have been aroused about the fate of Graphics Processing Units (GPUs) miners.
According to an analysis by CryptoMonday.de, Ethereum's transition to PoS may eliminate GPU mining since it now dominates 97% of GPU mining activity. This upgrade could see the current mining system become redundant.
GPUs have been a vital part of cryptocurrency mining since Bitcoin's creation. Ethereum has also been mined using GPUs since its inception. The ETHash algorithm is designed in such a way that it can be efficiently mined using GPUs. However, this may no longer be possible with the recent transition to proof-of-stake.
Speaking on the data, CryptoMonday CEO said the following,
The transition of Ethereum from PoW to PoS will significantly impact the GPU mining industry. If GPUs can no longer be used to mine Ethereum, this will reduce demand for these devices. Still, it is unclear what will happen to the prices of these devices, as other crypto assets can be mined using GPUs.CryptoMonday CEO Jonathan Merry
Effects of Proof of Stake
Ethereum's shift to proof-of-stake will see validators stake their ETH tokens to earn rewards. This process is known as staking. Unlike mining, which requires expensive hardware and consumes a lot of electricity, staking is a much more eco-friendly and cost-effective way of maintaining the network.
Since staking requires a lot less energy than mining, the transaction fees will also be lower. This is because miners are rewarded with ETH for their efforts in validating transactions and maintaining the network. As such, they tend to charge higher fees to cover their costs.
With staking, however, there is no need for expensive hardware or high electricity costs. This means that gas fees will be lower than they are currently.
While the transition to proof-of-stake is positive for the Ethereum network in terms of ecology and costs, it could spell the end of GPU mining. This is because the existing mining hardware will become obsolete, and GPUs will not be needed in the staking process. If this happens, it could lead to a significant drop in the demand for GPUs.
Possible Options For Ethereum Miners
Miners of Ethereum would likely have to switch to another coin that uses the same algorithm, which is Ethash. This would not be the end of GPU mining, as GPUs can still be used to mine other coins.
There are a number of coins that use Ethash, and some of these include Ethereum Classic (ETC), Ubiq (UBQ), Metaverse ETP (ETP), and Musicoin (MUSIC).
While it is true that the transition to proof-of-stake could spell the end of GPU mining for Ethereum, it is not the end of GPU mining altogether. Several coins still use the Ethash algorithm, and miners can switch to these coins if they want to continue mining with their GPUs.