The Sword of Damocles Over the Heads of ETH Miners: Ethereum 2.0 Will Launch the First Public Test Network

On June 23, the official Ethereum blog updated its development progress, and the Altona v0.12 test network is expected to be launched next week. This means that after discussions and continuous improvements, the Ethereum development team will finally launch the first public, multi-client test network.

Image source: blog.ethereum.org

Similar to the current multi-client testnets, Altona is more of a developer network than an end-user-centric testnet. That is, Altona is first and foremost about letting client teams check out the v0.12 software in a production setting, while letting ETH2.0 developers as a whole work out bugs that might only show up in a multi-client setting.

Assuming Altona is generally successful, the next step is a larger, community-focused testnet, with a minimum of 16,384 validators required to launch the mainnet configuration.

It is not known whether Altona's release will promote the progress of ETH2.0, but the sword of Damocles hanging over the heads of Ethereum miners is doomed to fall. According to OKLink's statistics, after 2019, Ethereum's total network computing power has never exceeded 200 TH/s. As of June 24, Beijing time, Ethereum's total network computing power was only 174.16 TH/s, down 1.51% from the previous day.

Image source: oklink.com

Of course, the decline in Ethereum’s computing power is also related to the drop in currency prices.

Since Vitalik announced the Ethereum project in 2014, Ethereum has been in existence for six years and has experienced many forks and price fluctuations. The ICO boom in 2017 pushed the price of ETH to a high point, with the peak price approaching RMB 10,000. After that, the price of Ethereum fell into a slump, resulting in only some new machines with non-negative returns from Ethereum mining.

The amount of mining income is the result of a combination of factors, including coin price, mining difficulty, electricity price, etc. If the electricity price is not very cheap, mining Ethereum would have been unprofitable. Many small miners have already begun to flee Ethereum and turn to small currencies as early as 2019.

However, the real reason for the exodus of Ethereum miners can be attributed to ETH2.0.

Compared with the halving of mining revenue brought about by the Bitcoin halving, after the implementation of ETH2.0, there will be no Ethereum mines to mine.

ETH2.0 is a complete replacement for Ethereum. It is not an easy task to replace the second largest currency in the cryptocurrency market. As the saying goes, "Rome was not built in a day". Similarly, a huge project like Ethereum 2.0 will also have to go through several stages of gradual evolution. According to the official plan, it will take about two years for ETH2.0 to go through stages 0, 1, and 2.

This means that Ethereum miners only have a little over a year left.

Many industry insiders believe that after ETH2.0, Ethereum computing power may flow to ETC. According to OKLink data, ETC computing power reached its highest peak ever in January 2020, exceeding 20 TH/s. However, there are also views that the current ETC mining scale cannot bear all the outflow computing power of Ethereum, and the influx of all computing power into ETC will cause the difficulty to rise sharply.

By then, Ethereum mining machines might be sold by weight?

Unlike Bitcoin's ASIC mining machines, the most important thing about Ethereum mining machines is the graphics card. In theory, high-quality graphics cards can flow back to the traditional market and be used for gaming graphics cards, deep learning, etc. If the original mining graphics card is used to train deep learning models after the architecture is modified, the cost will be 80%-90% lower than using a public cloud.

Recycling the residual value of the graphics cards from mining machines is a good solution, but one issue that needs to be considered is that miners need to align resources and find buyers.

In addition, there are dozens of small currencies that graphics card miners can mine. Compared with graphics card recycling, finding the "next Ethereum" may be a more realistic solution. After all, it is still difficult for small miners to find buyers.

Image source: wabi.com

Compared with the miners' computing power that has nowhere to go, ETH2.0 does not put that much pressure on mining pools.

It is reported that several major Ethereum mining pools such as F2Pool and SparkPool have long begun to explore the role of mining pools under Ethereum's transition to PoS mechanism. Coupled with the entry of several major exchange mining pools, the transition to PoS seems inevitable for them.

While ETH2.0 is opening up the PoS explosion, these hashrates that are about to retire will also open up the road to the rise of small currencies. Perhaps, our next expectation can be, which small currencies will "benefit" from this hashrate migration competition?