Babbitt Original丨Life and Death Situation for Ethereum Miners: 4G graphics card mining machines may be wiped out in the fourth quarter!

Everyone is panicking about the Bitcoin halving, with some saying that this could cause the biggest mining disaster in history.

Ethereum has not halved, but in August of this year, it is very likely that Ethereum GPU miners will surrender, and more than 50% of the computing power of the entire network may exit the Ethereum network.

The sword of Damocles hanging over the heads of GPU miners is the Ethereum DAG file that is approaching 4G, which means that 4G graphics cards are likely to be wiped out.

This is not an exaggeration. Just in the past two days, 2Miners mining pool revealed that in February, Bitmain's Antminer E3, the once most powerful Ethereum Asic mining machine, had a mining efficiency drop of about 80% on ETC, from 180 MH/s to 30 MH/s. They predict that E3 will not be able to mine ETH in April.

2Miners believes that the problem with E3 may be related to DAG, because the graphics card of E3 only has 4GB.

What is DAG? Why has it become a nightmare for GPU miners? Where will these obsolete GPU miners go? Will Ethereum be in danger due to the sharp drop in computing power? Who will benefit from it? Let's take a look.

What is a DAG file?

Ethereum's consensus algorithm is called Ethash, which is very similar to Bitcoin's POW algorithm. Miners need to constantly look for random numbers to obtain mining rights.

According to Shi Haihong, a developer of MATPool mining pool, unlike Bitcoin which emphasizes the computing power of mining machines, the Ethash algorithm consumes a lot of video memory of the graphics card and is a memory-hard algorithm. Specifically, the Ethash algorithm requires that the verification information of the new block contains the encrypted information of all previous blocks, which is the DAG file (DAG is also called directed acyclic graph), which needs to be stored in the video memory during mining.

Therefore, to mine Ethereum, the graphics card memory must be larger than the current DAG file size.

In June 2016, Ethereum adopted this design in algorithm optimization. Since then, this DAG file has continued to grow at a rate of about 520M per year, and by December 2020, the file is expected to reach 4G.

To a large extent, this design makes Ethereum suitable for GPU mining and has strong resistance to Asic mining machines. Qiu Xiaodong of Spark Mining Pool introduced that Asic mining machines can also stack video memory, but the cost is relatively high. Until today, Ethereum only has two Asic mining machines: Innosilicon A10 and Bitmain Ant E3.

Take A10 as an example. It has low energy consumption ratio, but the price is not low. One unit can be used as three graphics cards. Some miners think that the price-performance ratio is not high. Moreover, its mining efficiency is not very outstanding compared with GPU mining machines. Therefore, GPUs are the dominant force in Ethereum mining today.

However, the DAG file has a side effect, which is that once the video memory is lower than 4G, these graphics cards can no longer mine Ethereum, let alone Ethereum Classic (ETC).

▲Ethereum DAG file growth timeline, source: investoon.com

Will 4G graphics cards be wiped out? Ethereum computing power may drop by 50%

According to investoon.com, the current Ethereum DAG file is 3.48G and Ethereum Classic is 3.56G. Calculation shows that on December 25, 2020, Ethereum DAG will reach 3.99G. This means that the GTX1050TI 4GB graphics card will not be able to mine.

But the problem may be more pressing, because the video memory of a 4G graphics card is actually less than 4G, and the system also takes up space.

Song Xuejian is a big miner of Ethereum and CMO of cloud computing platform Bishide. He is currently mining Ethereum in MATPool mining pool. He said that in August 2020, 4G graphics cards will gradually encounter situations where mining is impossible, and 4G graphics cards currently account for more than 60% of the total computing power of Ethereum. This batch of graphics cards is the main graphics card mining machine that entered the mining market in 2017-2018.

Does this mean that all these graphics cards will be withdrawn from the market? Not necessarily. Song Xuejian said that miners have two ways to extend their working hours.

First, switch the system. Switch the mining machine from Windows to Linux, as Linux has a lower graphics card usage rate. The problem is that there is no test to prove that this is effective. Moreover, there are 500,000 4G graphics card mining machines, which is a huge project.

Second, modification. Expanding 4G video memory to 5G, 6G or 8G, but the cost of modification is hundreds of yuan per card. It depends on the price of Ethereum at that time to determine whether it is cost-effective.

If the above plan is not feasible, then these graphics cards will have a destination and become gaming cards and enter the second-hand market.

However, not all GPU miners are capable of processing 4G graphics cards. Therefore, Song Xuejian speculates that there is a high probability that Ethereum computing power will plummet by 50% in the second half of 2020.

At present, Song Xuejian said that they are ready, but what to do at that time still depends on the price of Ethereum.

Previously, Qiu Xiaodong of Xinghuo Mining Pool said that for graphics card miners, they also need to upgrade their mining machines, that is, upgrade graphics cards with 4G video memory to 6G or 8G video memory.

Song Xuejian did just that, and the process had already begun. But even so, the proportion of 4G graphics card mining machines in his hands still exceeded 50%.

The sad thing is that in the fourth quarter of this year, most of the miners who have 4G mining machines will definitely leave Ethereum.

Is Ethereum in danger? Are small currencies on the rise?

Currently, qkl123 data shows that the total computing power of Ethereum is 181T, and Ethereum Classic is 12T. This is almost the computing power of most GPUs in the market.

Will this foreseeable drop in computing power put the two chains in danger? Most likely not. To a large extent, a 51% attack is not a question of whether it can be done, but whether it is profitable. In the cryptocurrency world, no one should be able to launch a computing power attack on Ethereum. And if it is put outside the circle, most likely no computing power giant will do this business.

So, if these 4G graphics cards continue to remain in the cryptocurrency circle, will they flow to those small currencies?

Qiu Xiaodong believes that finding alternative currencies and allowing potential POW currencies to take over a large amount of ETH graphics card computing power is an urgent task for miners in addition to upgrading their mining machines.

Which small currencies have this capability? According to the data provided by the official website of MATPool mining pool, it can support 18 GPU mining currencies, including Grin, BEAM, CKB, RVN, XMR, BTG, AION, etc. These are relatively well-known currencies, and more unknown small currencies can also be mined with GPUs.

▲MATPool mining pool shows GPU mining profit ranking (https://matpool.io/)

Sanyi, the founder of Niubiquan, told Babbitt that the computing power will first be dispersed to GPU mining coins with higher market value. "As the computing power increases, the mining cost increases, which is good for the price support of small coins." He said. But the problem is that if the computing power and price of small coins fluctuate too much and the market value is not high, miners will sell tokens after a large number of graphics cards enter the market, which may drive down the price, causing ecological damage and thus collapsing a small coin.

Song Xuejian also mentioned that small coins are actually very "troublesome" for miners, as they have to look for them and consider whether they will collapse. In addition, GPUs are also divided into A cards and N cards. Therefore, although small mining coins can be mined with GPUs, the currencies suitable for A cards and N cards are different. For example, A cards cannot mine many small mining coins.

From the perspective of computing power, there is currently almost no small currency that can take over these retired computing powers. Moreover, it is a pity that many of the GPUs to be retired are A cards, but in any case, these computing powers with nowhere to go may really be a very good opportunity for small mining coins. 2020 is considered to be a half-year for mining coins, and the total number of mining coins is calculated to be more than 700.

Which small currency will stand out? Perhaps this is a major highlight of this great migration of computing power.