After years and years of waiting, it seems like ETH 2.0- the long-planned upgrade to the Ethereum network – is close to its finish line at last.
Founded over five years ago, the Ethereum platform and its native token Ether (ETH) had both initially remained largely overshadowed by Bitcoin – popularly acknowledged as the original cryptocurrency. However, as of the past few months, Ethereum has been gradually gathering momentum. In July 2020, it was reported that the use of the Ethereum network has managed to surpass that of Bitcoin.
Now, Raul Jordan, Ethereum developer and co-founder of Prysmatic Labs, has stated that his team will complete the development of Ethereum 2.0 by October 15, 2020. The final remaining features- that include ensuring that Ethereum 2.0 clients are interoperable and can be used interchangeably by users without the risk of losing validator tokens- are currently being developed by Prysmatic Labs and other software development teams.
Meanwhile, the recent surge of activities within the Ethereum ecosystem has been impossible to ignore. According to the data from Glassnode, the number of active addresses on Ethereum has just reached 47,310,199, a record high, as of October 7. The previous highest record was 47,309,578 earlier in the same day. While this does partly result from the popularity of DeFi, it’s undeniable that Ethereum 2.0 has also attracted its fair share of attention.
All things considered, it’s quite safe to say that this is as good a time as you’ll ever get to consider mining ETH.
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Great! But How do ETH Miners Work?
The Ethereum mining algorithm has higher requirements for memory, which has limited the use of ASIC (application-specific integrated circuit) chips in Ethereum mining to some extent. As a matter of fact, the vast majority of Ethereum miners are based on GPU, which reflects the success of the Ethereum mining algorithm in ASIC resistance.
As for the absolute value of the computing powers, let’s look at an example to see how Ethereum and Bitcoin miners’ processing powers fare stacked up against each other.
Suppose you spend ¥10 million each to buy both mainstream Bitcoin and Ethereum miners. The comparison of the computing powers of the two would look something like this:
In the above table, the unit for Bitcoin computing power is TH/s, while the unit for Ethereum computing power is MH/s. The Bitcoin miner chooses Shenma M31S, and the Ethereum mining machine chooses 5700 XT (they are all top-ranked in this year’s sales, which means they are more representative). Both sides invested in ¥10 million worth of computing power, and the increase in computing power of the entire network was at the same order of magnitude, with barely noticeable difference. From this perspective, the “immunity” of the entire Ethereum network’s computing power to capital is comparable to that of Bitcoin’s. So, the Ethereum network does look robust.
What’s the Current ROI Circle of ETH Like?
Presently, the mainstream GPU manufacturers in the market are AMD and Nvidia Corporation. In the Ethereum mining market, the more popular graphics cards are Nvidia’s 1660S and AMD’s 5600 XT and 5700 XT. Based on the graphics cards that can be quoted in the market, here we illustrate the current revenue and payback period of graphics card mining.
According to the current market price, the daily net income of the 5700 XT 8 card machine is 115.6 RMB, with the static payback period for Ethereum mining being around 240 days right now. As for Nvidia’s 1660S, the static payback period is about 210 days. This investment is extremely beneficial from the standpoint of the static ROI cycle.
It should be noted that at present, there are large fluctuations in not only the price of Ethereum, but also the daily ETH mining output. For example, data shows that 1 MH/s can mine 0.00013576 ETH on October 7. The result in the above table is based on 1 MH in the 7 days prior, and the payback period is calculated by the average daily output.
At a conservative estimate, the static payback period for Ethereum is about 10 months.
Factors That May Affect ETH Mining, and the Associated Risks:
It’s only natural for you to be wondering about the risks of Ethereum mining. To make things clearer, now we discuss some factors that affect the returns out of Ethereum mining, and the potential risks you would be running if you do decide to get into the game.
1. The Total Network Computing Power
This one is among the most influential factors that might lead to variation in the profits. At present, the average block generation time of Ethereum is about 13 seconds with a reward of 2 ETH/block. Plus, about 5% of the blocks on the chain are with uncle blocks. The higher the computing power of the entire network goes, the lesser the unit reward gets.
In addition to block rewards, income for Ethereum miners also includes miners fees. Recently, the liquidity mining offered by some of the decentralized exchanges (such as Uniswap) has been popular; which in turn resulted in the skyrocketing of the miner fees. In extreme cases, the fee for a single block exceeded 4 ETH. Of course, such unusually high commissions are unlikely to last for a long time, but the rise of the DeFi is technically advantageous to the commission incomes of miners.
Provided that system rewards and processing fees are basically guaranteed, the rewards of unit processing power depend on the computing power of the entire network. Since 2019, the computing power of the Ethereum network has been stable with no drastic shifts being spotted; it has remained around 200 TH/s.
There is a shortage of GPU in the market at the moment, with new graphics cards flowing into the blockchain fields being even more difficult to find. This is primarily because of the COVID-19 outbreak, and some additional issues with the manufacturers. This means if the price of Ethereum and the miner fees continue to rise, Ethereum’s computing power may increase to a certain extent this year; bringing about a potential risk for miners.
For new miners, however, there is a certain point of benefit. Ethereum mining needs to store DAG files, the sizes of which will continue to grow with the increase of block height. By December 2020，DAG files will exceed 4 GB in size. This will render miners with 4 GB cards no longer capable of mining Ethereum. These batches of graphics cards will need to be replaced or upgraded, which in turn will bring down about 30% of the total computing power on the Ethereum Network. This means that miners with 6 GB or 8 GB video memories will be capable of mining more ETHs.
2. Safety Margin & Miner Residual Value
The safety margin can be simply understood as the shutdown price. When the mining revenue is not enough to cover the miner operation and maintenance costs, the price at that time is called the shutdown price.
According to the current output, with the annual electricity price being 0.36 RMB/kWH, the energy efficiency ratio is 4 JMH, and the current shutdown coin price of a miner is around 380 RMB. Ethereum mining electricity costs are relatively low and have a high safety margin, and the Ethereum GPU miners have a higher residual value. After two years of mining, the residual value, which is an important part of a miner’s income, gets about 30% of the market price of the graphics cards.
We have also witnessed a significant increase in graphics cards prices this year. Prices of graphics cards such as the 1660S, 5600 XT, and 5700 XT have increased by about 30% or even higher, which is also a potential risk for miners.
How Does Ethereum 2.0 Fit into All This?
Some people might worry that the arrival of Ethereum 2.0 will affect the existing Ethereum miners. Ethereum 2.0 is mainly divided into three phases, Phase 0, Phase 1, and Phase 2. Currently, Phase 0 has not yet been launched. It can be conservatively estimated that the Ethereum GPU miners can still mine for at least one year. So based on the estimated 10 month payback period, and hedged currency output for half a year or even the entire payback period right now is a great time for Ethereum mining.
Miner Bootcamp: Cloud Mining
While making money from mining sounds good on paper, most users don’t have the time to research mining machines and graphics cards. This is where Mining Man comes in- a mining agent that can assist you in mining.
Mining Man is a computing power and miner selling platform that focuses on mainstream token mining, providing users with solutions in terms of mining pools, softwares, and miners. Mining Man has been released through AToken; this cooperation signifies that AToken has officially entered the field of aggregated mining services to provide users with better asset value-added ministrations.
How Does Mining Man Work?
Mining Man provides you with processing power, so you wouldn’t have to worry about what instruments to choose for the best possible returns. All you need to do is pick the ETH mining product of your choice and pay the price for that- then Mining Man takes over the actual mining. Once the mining revenue is received, a reward proportionate to your investment would be sent to your AToken wallet automatically.
The cloud computing power products launched by Mining Man so far have the following advantages:
- High Profit: All Mining Man products are designed to offer the highest possible profits to all investors, the highest APY (Annual Percentage Yield) for Ethereum being 163.69% so far.
- No Commission: As per Mining Man’s directives, no management fee is charged.
- 1-Key Mining: Mining Man lets you buy your products with 1 key, which makes profiting easier.
- Abundant Choices of Products: You can choose between a wide range of products depending on your investment objectives: while there’s cloud computing for small scale investments, there’s also whole set miner for large scale investments.
How to Participate in ETH Mining Through Mining Man:
- First, enter the Mining Man dApp. You can access the official page through AToken.
- Choose the ETH cloud computing product you want to.
- Buy directly with USDT.
And you’re all set! Now you can track your revenue status that would get updated regularly. The principle and interest will be back to your account every 30 days.
Very recently Mining Man came up with a special bonus program to celebrate the combined occasion of National day and the Mid-Autumn Festival; the offer ran from September 30 to October 8.
In conclusion: from the current point of view, Ethereum mining seems like a very good investment option, especially in the current economic conditions. So whether you do it all by yourself or consider utilizing a mining agent, you’d be wise to put your money behind ETH. Keeping in mind the ever-present fluctuations in the market, it is best to hedge the currency output during the half-year or even the entire static return cycle.
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