Major bitcoin mining companies and mining equipment manufacturers are increasing their investments in ethereum mining despite the imminent second network switch to proof-of-stake (POS).
Public bitcoin miners Hut 8 and Hive are ramping up their capabilities to mine the second largest cryptocurrency by market cap. Meanwhile, mining equipment manufacturers such as Bitmain and Innosilicon are set to launch new Ethereum miners later this year.
This investment may seem strange, given that the Ethereum system is expected to migrate from proof-of-work (POW) to POS in five months, and because POS mining does not require such advanced machines. The increase in demand could be attributed to expectations that migration will be delayed, according to professionals in the sector.
“We were told mining was going to end four years ago and it’s still going,” said Mark D’Aria, CEO of Bitpro, a New York-based consulting firm focused on brokering and managing Ethereum mining hardware. erc20 token development company “It’s always been a wait-and-see thing: things tend to take longer than everyone expects.”
While the London fork in early August brings the network one step closer to Ethereum 2.0, significant updates throughout Ethereum’s six-year history have had a history of multiple delays.
For example, the Constantinople upgrade — a key step toward Ethereum 2.0 — was originally scheduled to launch as early as July 2018; however, a bug in its code delayed its deployment until February 2019, causing further delays for the migration.
Ethereum Improvement Proposal (EIP) 3554 introduced something known as the “difficulty bomb”, which adds artificial miners to increase the complexity of mining and makes mining operations less profitable. This period has been called the “Ice Age”. Ethereum developers initially introduced this EIP in 2015, but it has been postponed until December 2021.
As the price of ether rises, it may be more difficult to transition the network to proof-of-stake, said Ethan Vera, chief operating officer of Seattle-based mining company Luxor.
check out us : erc20 token development
In addition to technical challenges and asset security issues on Ethereum, potential resistance from the Ethereum mining community could be another factor slowing down the migration to POS.
“Something that hasn’t really been appreciated is how much resistance there is going to be to that move to proof-of-stake,” D’Aria said. “Thinking that they’re just going to flip a switch and shut down billions of dollars of miners is crazy, that’s not going to happen.”
The relatively low power consumption compared to bitcoin miners, combined with the small amounts of heat and noise from ethereum mining equipment, makes it possible to mine ETH on graphics processing units (GPUs) at home, Vera said.
More than 90% of ethereum miners are based on GPUs, which is also common hardware used by gamers, D’Aria said. However, cryptocurrency mining heavyweights are moving to break into the industry and make higher profits than mining bitcoin.
The public cryptocurrency mining company Hive Blockchain claimed that it has become the largest public Ethereum miner in the world with 3,383 gigahashes per second (GH/s), which was 1.3% of the total hashrate of the Ethereum network in that time, according to a Hive financial report dated Oct. 15, 2020.
The Vancouver-based company aims to increase its Ethereum mining hashrate to 5,500 GH/s, which would mean a 62.5% increase compared to that level by the end of this year. Hive in February acquired a 50-megawatt (MW) data center in Canada from One, a provider of GPU data center colocation services.
Another public cryptocurrency mining company, Hut 8, bought specialized Ethereum mining equipment for $30 million from GPU manufacturer Nvidia in May. The company said all of that is expected to be delivered and installed at its Alberta facility by the end of August. It plans to achieve a hashrate of 1,600 GH/s with a power usage of 4MW.
drive immediate short-term and long-term revenue growth goals in fiscal 2021, “ the company said .
Unlike bitcoin mining companies like Marathon and Riot, companies like Hut 8 have a mandate to use stranded or underutilized energy and turn it into computing power and reward, according to Vera. erc20 token creator
are looking at a bigger picture of how they can capitalize on their computing power,” Vera said, adding: “Crypto is a vertical of the many who would persecute.
More powerful ethereum miners are coming onto the market, shortening the payback period on those operations and increasing returns.
Specialized Ethereum miners, also called application-specific integrated circuits (ASICs), are designed by miner manufacturers like Bitmain specifically for mining, while most GPU mining gear is made by reusing graphics cards originally used for gaming.
Nvidia introduced its first ethereum mining equipment in early 2021, while Bitmain and Innosilicon plan to deliver their latest ethereum mining equipment later this year.
Mining equipment manufacturer iPollo has achieved more than $200 million in pre-order revenue for its latest Ethereum ASIC model, which is due to ship in Q4 2021, said Paul Yao, vice president of global business development at the company. His goal is to increase its output when the company reaches higher capacity and can manufacture year-round equipment in 2022, according to Yao.
The Singapore-based company will set up an office in the United States next year and shift its focus from the Chinese to the North American market. “We are seeing growing demand in that area and in some of the Asian markets.