There has been a lot of speculation around Ethereum shifting to a Proof of Stake consensus algorithm and how it will affect cryptocurrency miners. While some people believe that it will be the end of mining, the truth is, it won’t. There are other coins to mine and still make decent passive income. However, to understand how the shift affects miners, we first need to understand what mining is and how the PoS shift will affect Ethereum.
What is crypto mining?
Crypto mining is the process of generating new blocks using software and hardware to record new transactions. When mining, the miner receives rewards for every successful block mined and also a part of the gas fees of the transaction recorded on the mine block.
Apart from Bitcoin, Ethereum was the most sought-after cryptocurrency among miners as the rewards were high for the miner due to comparatively high gas fees and hash rate. However, these high gas fees and network congestion have led Ethereum to shift from a Proof of Work consensus algorithm to a Proof of Stake consensus algorithm.
This shift affected miners as this update fundamentally changed the way the blockchain network operates. It is not possible to mine Ethereum the old way anymore, but that doesn’t mean all the Ethereum miners will lose their investments and will stop earning. Let’s see how it affects the miners.
PoS effect on Ethereum mining
As the blockchain network shifted to the Proof of Stake consensus algorithm, which requires considerably less power and can handle larger numbers of transactions quickly, the underlying network operations were bound to change.
However, what miners need to understand is that there are several other Proof of Work coins to which the hash power will be distributed. Some of them include Ravencoin, Flux, and Ergo.
Moreover, some reports also suggest that after The Merge, mining will become more beneficial as there will be more distribution of resources and less competition. Also, it is important to understand that new ETH tokens won’t be mined as it was earlier. Now the stakers who stake their tokens to generate new blocks will only receive rewards from generating new blocks and not from the gas fees.
So, while Ethereum staking won’t be as rewarding as earlier, other PoW tokens will utilize the hash rate, ultimately boosting new projects and developing the digital economy.
Which coins to mine after Merge?
Ravencoin – RVN
Ravencoin is a veteran project that forked from Bitcoin. Launched on January 3rd,2018, Ravecoin recently underwent a halving event that caused the network’s hash rate to decrease significantly. Moreover, the project has undergone three algorithm changes to move away from ASICs and FPGAs mining and is currently operating on the KawPow algorithm, which is ASIC resistant. While KawPow is power-consuming as compared to others, it can be mined using GPUs.
One of the biggest advantages of Ravencoin is Assets. The project was one of the first to implement NFTs, and its assets are better than NFTs on the Ethereum network as they have more utility than just being images.
Flux – FLUX
Flux is an interesting new project that aims to improve the Web 3 space by facilitating its adoption. The project aims to achieve this vision by making the decentralized cloud infrastructure simpler and providing global users the chance to host a wide variety of apps using Flux nodes, such as a Minecraft server.
Flux operates with a mining algorithm called ZelHash, which is a variant of Equihash and is generally named Equihas 154_4. Users can mine this algorithm in GPU, and according to its whitepaper, there is a possibility for supporting ASICs by making ASIC mining effective and cheaper. But the community of the algorithm intends to remain resistant to ASICs.
The utility and uniqueness of Flux give it a core advantage as the number of possibilities of opportunities using decentralized hosting are limitless.
Ergo – ERG
Ergo is a cryptocurrency that enables the creation of smart contracts during transactions. The project aims to offer a secure, efficient, and easy way to implement smart contracts that also allow the project to support various dApps. Moreover, these dApps execute in a predictable manner at known costs.
The coin supply of ERG is capped at under 100 million and operates on a PoW consensus algorithm. The block rewards started at 75 ERG and will reduce to zero like other PoW projects as the entire supply is mined. However, interestingly the lost coins can be returned to circulation by collecting storage fees to prevent a steady decrease in the circulating supply of lost keys.
Ergo operates on Autolykos, an improved algorithm that helps miners to gather up and mine in pools, unlike the previous versions, which discouraged pool mining.
Conclusion
The shift of the Ethereum Network from PoW to PoS is sure to affect Ethereum miners globally. However, these alternatives offer a lucrative opportunity for the PoW miners to shift and still make good profits. The massive hash rate that Ethereum has acquired over the years will not be lost but distributed to other PoW projects.