Mining profits of the PoW cryptos have gone into the negative following the Ethereum merge as ETH miners flood the hashrates of these other coins.
A couple of days ago, the much awaited ETH merge finally arrived and transitioned the network into a PoS-based consensus mechanism.
Since proof-of-stake chains don’t rely on miners for hashing blocks, every miner attached to Ethereum was left without the whole of their revenues.
Some of these miners have sold off their mining rigs in order to exit the market, while others have moved onto the remaining proof-of-work networks.
There is, however, one problem with miners shifting to other coins and it is that all the PoW cryptos that utilize graphics cards for mining (that is, those other than Bitcoin) had magnitudes lesser hashrate than ETH did before the merge.
There is a general concept of mining difficulty across crypto chains, where the network adjusts the rate at which miners can hash new blocks according to the total hashrate. Usually, coins increase the difficulty when the hashrate goes up to balance things out and keep the block production rate near constant.
A flood of GPUs previously being used for ETH mining suddenly entering into these other, significantly smaller hashrates would therefore result in a difficulty explosion.
Here is some data from the crypto mining profits calculator website WhatToMine that shows where the profits of the PoW coins with some of the largest market caps currently stand:
As you can see in the above table, Ethereum Classic, the coin that’s currently the most popular mining option in the market, nets miners a profit of -$0.78 per hour right now. This figure assumes an average electricity price of $0.1 per kWh, and uses the hash of three AMD RX 480 graphics cards for making the calculation.
Even with the strongest GPU available on the market, the 3090ti, ETC mining hourly profits remain in the negative at around -$0.50.
As some already speculated before the merge, it would appear there just wasn’t any crypto with hashrate and market cap large enough to absorb the ETH miners, which made up for the vast majority of GPU crypto miners out there.
It’s possible a PoW coin can rise up in the future to become large enough to host comparable amounts of hashrate as Ethereum once did, but for now it would seem graphics cards-based mining may be dead.
At the time of writing, Ether’s price floats around $1.4k, down 6% in the past week.
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