It has been announced by the Ethereum Foundation that by the end of 2017, the proof-of-work requirement will be replaced by a new finish line called Proof of Stake. This will be good news to miners, as well as to gamers, who have also suffered from the drought.īut while this hardware evolution takes place, it may be a case of too little too late, at least for Ethereum mining. Ethereum Mining – From Proof-of-Work to Proof-of-StakeĬomputer hardware manufacturers are responding to the glut of GPUs by developing and releasing mining-specific hardware, which promises to handle the demand for high efficiency processing while using a lower energy footprint.
In fact, it might never happen, at least in the way they expect, because in addition to these diametrically opposed challenges (price and difficulty), the Ethereum mountain is now shifting under their feet. They had naturally expected to recoup their investment and start generating profits through a continued climb in Ethereum valuation, but that has not happened. The price tumble and the DAG spike together have left miners exposed, having paid large amounts of money for their hardware, as well as significant electricity bills. Over the past few weeks the DAG has ratcheted up to unprecedented heights, requiring far more efforts and resources from each individual miner. Ethereum has been built in such a way that the difficulty factor (DAG) of the the PoW increases as more miners join, or once blocks are solved in under ten seconds.Īs more prospectors join the party, the more difficult things become, and this is done, in large measure to keep things honest. And that led to the third downward force: the increase in the difficulty of obtaining a proof-of-work.įundamental to the cryptocurrency mining business is the proof-of-work (PoW), which is in essence, an algorithm or mathematical challenge that a miner must solve before finding a new block in the blockchain, obtaining consensus of that block, and getting rewarded financially for doing so.
With the increase in value came a surge of interest from miners who saw a relatively straightforward way to get a piece of the action, simply by downloading some zipped files and joining the Ethereum matrix through command line prompts. This new approach to funding drove the price of Ethereum sky high in comparison to the first couple of years of its life, where it had flatlined below $10. Market analysts estimate that the Ethereum crash was more of a market correction, coming down from a general frenzy over alt-coin paired with an enthusiasm for ICO’s (Initial Coin Offerings), which operated like IPOs for developers of new alt-coin technologies, but with investors obtaining their shares in Ethereum.
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