Not only have ether miners faced the constantly possibility of a network switch to Proof of Stake. They’ve also suffered exile from China along with all other miners. What does their future look like? These guests explain.

This livestream is great educational material for any miners active in or observing the ether and alternate cryptocurrency mining ecosystems.

Video Recording

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Audio Version

Show Notes

Introductions (timestamp)

  • Christian Krautter, President of American BitPower: has mined bitcoin, ether, and a variety of altcoins for years. The current bull run has been phenomenal and outstandingly fortunate for miners despite some obstacles. Waiting for the merge makes ETH mining interesting.
  • Chris, Marketing Lead at Flexpool: has been into ether mining since last year and eventually joined the team for a pool. The best thing of the past year has been seeing lots of hashrate that was consolidated in China move to North America and other parts of the world.

How much hashrate is left in China? (timestamp)

  • There’s absolutely still mining in China. But the larger, more organized units are relocating. Those are the easier to track and target by the government.
  • The hashrate chart clearly shows the hit from China regulation, but by no means is hashrate at zero in China.
  • Lots of relocation of hashrate within China and lots of hashrate migrating to other countries.

Ether hashrate market changes after China’s ban (timestamp)

  • Ether mining has always existed under the specter of the Eth2 shift. There’s always some apprehension to lay out a ton of capital for more mining.
  • China’s ban saw an obvious bump in profitability and hardware availability though. It wasn’t as significant as for bitcoin miners, but there the dynamics were similar.
  • Ether mining is substantially more resource intensive and technically difficult than bitcoin mining. There’s definitely higher stress levels lately with some market disruptions.
  • Even with bans and protocol changes, GPUs aren’t just for mining ether. There’s lots of options.
  • Ethereum mining wasn’t profitable for years, so Chris thinks people will still mine ether.

Ether mining revenue (timestamp)

  • Ethereum mining revenue is really high right now relative to bitcoin revenue because there are frankly many more use cases on the Ethereum network. Bitcoin is primarily for holding.
  • Bitcoin mining makes more headlines because it’s significantly larger than ether mining.
  • But lots of trends (e.g., NFTs, DAOs, etc.) are putting much more data on the Ethereum chain for miners to process, and revenue is increase in proportion to that.
  • Bitcoin mempool has been fairly empty since July 2020, and lots of the market just doesn’t need to use the Bitcoin blockchain right now.
  • Ratio of ether rewards to bitcoin rewards is at least a 20-to-1 ratio right now

Pools that gained from the China ban (timestamp)

  • Ethermine and F2Pool have over 51% of the network’s hashrate, but that scenario probably won’t happen.
  • Those two pools likely won’t be able to coordinate such an attach with each other.
  • Ethereum developers would try to take immediate action if they though there was a risk.
  • It’s natural for pool providers to offer more services as the hashrate dynamics change.
  • Flexpool and other pools are well positioned to expand as some pools close.
  • Decentralization of hashrate is always a key concern for any project though as it’s at the heart of everything everyone is building.
  • For pools, it’s definitely true that the more, the merrier.

Hodling versus selling ether holdings as miners (timestamp)

  • American BitPower holds as much as possible.
  • Every mining group has a different strategy for how to manage their holdings.
  • Lots of ether mined goes to paying server bills and employee wages (Flexpool)
  • Lots of good options for lending and staking rewards too instead of selling.
  • Revenue also goes to taxes.

When will the Eth2 merge actually happen? (timestamp)

  • Christian: Doesn’t think the merge will happen by the June 2022 deadline.
  • There are continued delays all the time, but it will happen eventually. Lots of “ETH killers” becoming stronger and stronger
  • Chris: I don’t think any coin is a true threat to Ethereum, but ETH devs will take their time and build the merge slowly.
  • The merge needs to be tested and tested more before it happens.

Hosted by Zack Voell and Will Foxley