Ethereum miners will continue to receive lucrative payouts for their efforts in 2021, as the decade-old smart blockchain platform approaches moving away from the proof of labor consensus. The last few months have been exceptional for many cryptocurrency areas: Bitcoins (BTC), Ether (ETH) and many other coins have increased significantly in value. The growing volume of transactions and users has also benefited directly from the cryptocurrency mining system.
In particular, Ethereum miners have benefited significantly from the success of decentralized financial projects running on their blockchain. Various DeFi platforms have increased transaction volume and activity on the Ethereum blockchain, resulting in higher fees and longer processing times. While end users have to bear the brunt of the increased transaction fees, miners smiled at the bank all the way.
As a result, Ethereum miners achieved record revenues of over $ 830 million dollars in January 2021, a level not seen from the first weeks of 2018 to the collapse of the broader Ethereum, Bitcoin and cryptocurrency markets after impressive highs in December 2017.
ETH mining is superior to Bitcoin
While Bitcoin is at the top of the list of cryptocurrencies by market value, BTC miners do not have the same level of profitability as Ethereum miners. Philip Salter, chief operating officer of Genesis Mining, told the Cointelegraph that while Ethereum mining is currently “extremely profitable”, current miners and potential new entrants should be aware of the initial barriers to entry.
“The margin you can achieve with ETH is much higher than the margin you get with BTC. However, this does not mean that they are generally more profitable. The reason is that ETH miners are more expensive than BTC miners, so you have higher start-up costs to mine yourself. “…
Salter noted that mining Litecoin (LTC) and Dash are also profitable, but are still in the same room as BTC and ETH, adding that all other cryptocurrencies extracted with GPUs are not as profitable as mining ETH.
Pylon.finance founder OxGrimRipper, known by the pseudonym, also influenced the current mining climate and the current super-profitability of Ethereum mining, and told Cointelegraph:
“ETH is the most lucrative opportunity for mining right now, and even more so due to GPU and hardware shutdown in retail. Plus we are in the middle of the Chinese New Year, which means there is no factory production. Entrance barrier at the moment. As before. ”
The founder of Pylon.finance also said that while Bitcoin mining was less profitable than GPU mining, it is easier to get into, as users can buy ASIC mining which is mostly plug-and-play. However, GPU mining has various barriers to entry, including the cost of GPUs, the technical knowledge required to build the system, and operational considerations.
OxGrimRipper also agreed that the success of DeFi platforms has played a major role in the profitability of Ethereum miners today. Ethereum gas fees, the fees paid to miners to process a transaction, have risen with the increase in the use of DeFi platforms, and he says this is a positive sign for miners:
“Leading robots at AMM are the most important catalyst for the war on gas. But of course the war on gas is costly to do business. Rising petrol prices are a strong indicator that a miner is making money. Gasoline is at its highest level this year, while gas production is at a record high. In addition, the number of transactions in the ETH ecosystem is at its highest level this year. These are all compelling indicators of a healthy mining ecosystem, especially for those who already have their own infrastructure. ”
ETH miners have time to prepare for Eth2
At present, Ether miners continue to make money on high fees and transaction volumes as long as they stick to the blockchain. This is despite the ongoing and slow transition to Ethereum 2.0, which will mark the beginning of the end of Ethereum mining following the merger of the mainnet with the Proof of Stake Beacon chain, which was launched in December 2020.
The move from the current PoW protocol, which Ethereum is working on, aims to make blockchain more scalable, secure and resilient. However, it would also end what was a lucrative venture for Ethereum miners. While a full transition to Eth2 is still a volatile picture on the horizon, Salter said miners will carefully evaluate improvements in their business as Eth2 continues to evolve:
“Ethereum’s transition to PoS has been possible for a very long time, but it always looks like it will be in two years.