Investments in this equipment are made by calculating the rate of return of the cost of the equipment, that is, for how long it must be mined and how much must be sold to achieve the “break even” with the purchase of the equipment (adding other costs such as electricity). One of the main reasons is that the price of Ethereum fell to around $1,000, a figure very far from the $3,000 or $4,000 with which the cryptocurrency was moving in 2021.
The most immediate thing is that, with the price of Ethereum and Bitcoin in free fall below the Freezing Point, the hardware and the light needed to mine already cost more than the benefits you get. This is why Ethereum mining is about to end forever.
Additionally, the Ethereum network is discussing how to make a consensus protocol change. For now, the blockchain remains on the Proof of Work system (better known as PoW, the same system used by the Bitcoin network) but there are plans to move it to Proof of Stake, an alternative consensus protocol for the blockchain that requires lower power and lower computing power.
By changing this technology at the same time that the dollar price of ether (ETH) falls, those who invested in video cards for mining see their investments greatly affected. This generated an effect on the Ethereum network, which in recent days saw its activity reduced.
For some, this big merger will be the death of Ethereum. The Proof-of-work (PoW) or Proof of Work technology used by the Ethereum, Bitcoin and other blockchains is based on using extremely powerful graphics cards with high consumption, 24 hours a day, to make calculations. mathematical that allow to mine more cryptocurrencies, in addition to helping in the validation of transactions.
This model is very safe, but it requires a large energy consumption, and therefore pollution, and it is slow. That is why Ethereum has decided to change the Proof-of-work technology to Proof-of-stake. It is what they have colloquially called the Fusion, because it will merge the two types of blockchain.
Proof-of-stake (PoS) or Proof of Stake, eliminates cryptocurrency mining. Now the nodes of the blockchain are made up of validators, users who want to participate or who have Ether cryptocurrencies.
The new cryptocurrencies and the rewards for managing the trading operations are no longer given to miners or those who are doing a lot of calculations, but to the validators who spend more time on the network, who reserve more ether (bet), and other criteria. New tokens and rewards are distributed among all validators that meet the criteria.
PoS consumes 99% less, which eliminates the main criticism of cryptocurrencies. And since there is no need to mine, the graphics card market is freed up. In addition, transactions are faster. Against it, it is somewhat less secure.
The Great Ethereum Meltdown was going to take place in June. But it has been delayed to August, and everything indicates that it could be delayed further. But it is a decision that has no turning back.
With mining expired, miners are rushing to sell their graphics cards, which are no longer of any use to them. The offer is so great that companies like Bitpro have been created, which are dedicated to buying these cards and reconditioning them.
The problem is that the used market is going to be flooded with graphics cards that have been literally “crushed”, forced to work 24 hours a day at maximum performance, to mine cryptos. And that is why its life cycle is much shorter.
So be careful if you buy a second-hand graphics card that comes without a box or packaging, or its price is very low. It could come from a cryptocurrency farm, and has surely been squeezed to the max. Its durability will be much lower.
Source: Ambito
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