Ethereum Gas Fee Dropped 93%, but Miners Are Crazy About Buying Mining Machines! ?

On the 12th, a piece of news was reported by blockchain media in turn, that is, the Ethereum Gas price dropped to 36Gwei, which is the lowest value in the three months since DeFi became popular, and it has fallen 93% from the high point.

Does this mean that DeFi is completely dead and the story of Ethereum has come to an end? Judging from the on-chain data, this is not the case at all. Ethereum computing power continues to grow, and news from miners shows that they are frantically increasing their stakes...

Ethereum computing power increased by 100% in one year

▲Data from QKL123, the blue line is the average computing power of the entire network, and the yellow line is the ETH price

According to the data provided by QKL123, the average computing power of the Ethereum network reached a historical high of 295T on August 9, 2018, and then began to decline. In January 2020, the data began to rise slowly from 128T. After July, the data began to rise rapidly, and today, its average computing power of the entire network is 260T. Overall, in 2020, the computing power of Ethereum increased by about 100%.

The acceleration in July is easy to understand. In June, Compound launched the liquidity mining game. After that, YFI, YAM, SUSHI and UNI launched a new wave of DeFi, which not only pushed the ETH price to a high of 3,313 yuan this year, but also skyrocketed its on-chain fees and miners’ income. This naturally boosted the enthusiasm of Ethereum miners to buy mining machines and enter the mining market.

Now, what we need to observe is whether the hash rate will continue to rise. Looking carefully at the above picture, it is very interesting to combine the two broken lines of Ethereum price and hash rate.

First, on January 14, 2018, the price of Ethereum reached its highest point in history, about 8,900 yuan. However, it took eight months for the average computing power of Ethereum to reach its highest point in history, and at that time, the price of ETH was only 2,558 yuan, a drop of about 71% from the high point.

In other words, the peak of Ethereum's average computing power will lag behind the peak of ETH's price to a large extent.

Secondly, compared with the historical value of Ethereum computing power reaching today, the price of ETH has not changed much. In other words, if we only look at the computing power, the income of miners today is similar to the income at the highest point of computing power in history.

It is interesting to compare Bitcoin with the same data. First, the peak of Bitcoin's average network computing power also lags behind the price peak. From the data, the average network computing power began to decline after 10 months. But it soon turned to rise again. On a larger time scale, Bitcoin's computing power seems to have been rising. Today, this data has reached a historical high of about 140E.

That is to say, compared with a year ago, the price of Bitcoin has not changed, but the miners' income has theoretically decreased by about 50%.

This explains the starkly different living environments of Bitcoin miners and Ethereum miners today. Ethereum miners eat big chunks of meat and drink big gulps of wine, while Bitcoin miners can only drink soup, as the latter face increasingly fierce competition for computing power.

DeFi pulls back, ETH falls, Ethereum miners are increasing their positions!

Entering October, all cryptocurrencies related to DeFi have experienced a pullback. Data shows that in the past month, the total market value of DeFi has dropped by 15%, and the prices of more tokens have been cut in half. Ethereum Gas fees have also fallen from their highs to about 36Gwei, a 93% drop from the historical high of 545Gwei.

However, from the perspective of computing power, miners are continuing to increase their investment, and, judging from the above data, this increase in computing power is likely to continue.

Yao Binbin, founder of Jiangyu Mine, told Babbitt: "I think the computing power will definitely grow in the future, and it will rise steadily. The graphics card market is no longer a simple retail market. It is like the Bitcoin market in 2018, with a lot of capital flowing into it. For retail investors, I think now is still an opportunity, and there will definitely be no opportunities in a while."

Wu Junjie, brand director of Bishide, also said that they recently deployed a batch of Ethereum mining machines and sold many new machines. "But now graphics cards are out of stock, and many miners can't buy graphics cards." He said.

Recently, Nvidia launched the latest RTX 30 series graphics cards. Preliminary test data shows that the computing power of RTX 3080 and 3090 is stable between 90 MH/s and 115 MH/s. Compared with the top graphics cards in the market, this data has a 2-fold advantage. Ethereum miners are paying close attention to it. What impact will this batch of graphics cards have on the market?

Yao Binbin said that they learned from the manufacturer and agent that the output is very small, so he believes that there is no impact on the market computing power . In his opinion, the new computing power of Ethereum mainly comes from AMD's RX5700. "It comes more from A cards, including 578, 588, and 598, among which 598 is the main force of this series. In recent months, the output of N cards has been very small, mainly because the previous inventory of A cards was relatively large."

Zhang Songqing, founder of MinerOS, also said: " The current changes in computing power mainly depend on the price of the currency and the production capacity of manufacturers. Under the current currency price, if AMD6 series graphics cards and Nvidia 30 series graphics cards are mass-produced, graphics card miners will still be very willing to add machines. "

In fact, whether it is the payback period, the residual value of the mining machine, or the imagination of the future, the attractiveness of Ethereum mining seems to have surpassed Bitcoin, but the computing power of Ethereum is difficult to increase dramatically, because the supply of graphics cards is affected by the production capacity and market policies of upstream GPU manufacturers, and it is difficult to increase dramatically like the computing power of Bitcoin Asic mining machines.

But the interesting thing is that some people speculate that Ethereum has recently received some Asic mining machine computing power, which may come from the A10 series of Innomina Mining Machines or from unknown mining machines. Today, according to the data, the Ethereum network has nearly 50% unknown computing power.

Recently, the biggest possible reason for the reduction in Ethereum's computing power is the 4G graphics cards that will be eliminated from the mining market at the end of December. Previously, Shanghai Waiyi predicted in the "Graphics Card Mining Investment Analysis Report" that the computing power of 4G graphics cards accounts for about 40%. Excluding the upgraded parts, about 10%-20% of the graphics cards will be eliminated.

According to Wu Junjie, in the past two months, capable miners have been busy upgrading their 4G graphics cards to 8G, and some miners feel that their 4G has paid for itself, so they plan to quit mining when they can no longer mine. "We are almost done with the upgrade, and we are in the final stage. The technical department has been very busy in the past two months. It is impossible to predict how much graphics card computing power will be retired by then, as it is too subjective," said Wu Junjie.

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