Popular cryptocurrency profits fall as Ethereum miners GPU flood the market

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Last Updated on September 18, 2022 by Bitfinsider

The long-awaited ETH merge occurred a few days ago, converting the network to a PoS-based consensus mechanism.

Because proof-of-stake chains do not rely on miners to hash blocks, every miner associated with Ethereum lost all of their earnings.

Some of these miners have sold their mining rigs to exit the market, while others have switched to the remaining proof-of-work networks.

There is one issue with miners shifting to other coins, and that is that all PoW cryptos that use graphics cards for mining (that is, those other than Bitcoin) had orders of magnitude less hashrate than ETH did prior to the merger.

Across crypto chains, there is a general concept of mining difficulty, in which the network adjusts the rate at which miners can hash new blocks based on the total hashrate. When the hashrate increases, coins usually increase the difficulty to balance things out and keep the block production rate near constant.

A flood of GPUs previously used for ETH mining suddenly entering these other, much lower hashrates would result in a difficulty explosion.

As some speculated prior to the merger, it appears that there simply wasn’t any crypto with a large enough hashrate and market cap to absorb the ETH miners, which accounted for the vast majority of GPU crypto miners out there.

It’s possible that a PoW coin will grow to be large enough to host comparable amounts of hashrate as Ethereum once did, but for the time being, graphics card-based mining appears to be dead.

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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.



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