Ethereum finally switches to proof-of-stake, ending GPU mining

Tudor Cibean

Posts: 172   +11
Staff
In a nutshell: The Merge upgrade has landed, switching the Ethereum network to a proof-of-stake (PoS) algorithm. The new system reduces electricity consumption by orders of magnitude as it doesn't require miners to validate transactions anymore. As a result, the market might soon get flooded with cheap used graphics cards.

Ethereum has finally switched its consensus mechanism from proof-of-work (PoW) to proof-of-stake (PoS). The upgrade, known as the Merge, has been in the works for the better part of a decade and brings several noteworthy improvements to the network.

The first phase of the Merge started on September 6, when the Bellatrix hard fork went live, which prepared the blockchain. Afterward, all that was left to do was wait for the Terminal Total Difficulty block to be mined, which would set off the so-called Paris upgrade. This just happened earlier today.

So, what exactly changed? Ethereum's PoW system worked by having crypto miners compete to write transactions to its ledger by solving cryptographic puzzles (earning Ether in exchange). This process was extremely energy intensive, with a single Ethereum transaction requiring 200 kWh, comparable to what a US household uses in a week. In fact, the whole network used around 78 TWh a year, about as much as Chile.

On the other hand, the new PoS algorithm requires validators to hold and stake tokens (min. 32 ETH in this case). It works in a similar way to lottery tickets. The more ETH you stake, the more likely you are to get picked to write a block of transactions to Ethereum's digital ledger, which would earn you rewards. This system is significantly more efficient, with the Ethereum network expected to consume over 99.9% less energy. In turn, this will reduce global electricity consumption by 0.2%.

The Merge is also good news for gamers, as phasing out mining will hopefully avoid another GPU drought like the one we experienced in the past two years. Ethereum miners reportedly generated $733 million in revenue last month. Some will move to other GPU-mineable currencies, while others will sell their rigs to recoup investments. Due to this, used graphics card prices are likely to drop even more, though you should be wary of buying one as they come without a warranty and have been running at full load for weeks or months.

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m4a4

Posts: 3,184   +4,271
TechSpot Elite
And where are those that said it was never ever going to happen (leaving no wiggle room)? Love to see them take back what was said now lol

I wonder if there will be another that rises as the next mining coin. I doubt that it was that easy to end most of the GPU mining...
 

Fearghast

Posts: 595   +541
This is an incredibly interesting move, as it might not only affect the second-biggest crypto, but create a pressure to force changes in other currencies as well.
You can bet clueless people like politicians will take ETH as a "golden standard" to ban something.
 

terzaerian

Posts: 1,517   +2,260
Say hello to ETHW, the mining fork. Hopefully, it will fail miserably.
I would bet that, with the markets being down, that the inclination of dedicated ETH holders that now have ETHW as well would be to cash it out right away, to cover losses they've taken elsewhere with coin they've basically gotten for free. So I would see it taking a sharp drop in the near future.

That said stranger things have happened and the BSV and BCH forks of Bitcoin continue to cling to the underbelly of the ecosystem, so who knows.

And where are those that said it was never ever going to happen (leaving no wiggle room)? Love to see them take back what was said now lol

I wonder if there will be another that rises as the next mining coin. I doubt that it was that easy to end most of the GPU mining...
My hope is that the daisychained GPU rip mining falls out of fashion, and miners either sack up and buy ASICs or just mine casually on regular PCs.
 

Theinsanegamer

Posts: 3,959   +7,014
Crypto was initially supposed to free us of banks and sht. It ended up being infested with greedy mfs who pretended they were in it for any other reason. That is why I prefer it goes away.
Crypto was never about "freeing" you from a bank. It was, from its inception, a system for the 5% to gain the profit they feel like they deserved over the 1%. Any effect of freeing people from banks was an accidental side effect.
 

EdmondRC

Posts: 451   +657
Well that should nearly dry up the market for $1500 "Gaming" GPUs with 20+ GBs of VRAM. Sure, some enthusiasts will still buy them, but few gamers will. Previously those kind of price tags were reserved for workstation GPUs. I can't imagine that Nvidia will sell 1/2 as many 4090s as they did 3090s, at least not at $1500.
 

FF222

Posts: 308   +294
Miners will just stay on a proof-of-work hard fork, which in turn means that there will be NO decrease in the energy consumption of the network
 

Gezzer

Posts: 317   +153
Crypto was initially supposed to free us of banks and sht. It ended up being infested with greedy mfs who pretended they were in it for any other reason. That is why I prefer it goes away.

Actually crypto was never intended to free us from the banking system, that's the excuse that it's backers made. Blockchain is an interesting tech that was also a solution looking for a problem. So to validate blockchain, crypto was created to "free" us from the despotive banking system. Instead it became the currency of choice for criminals and speculators.
 

Eldritch

Posts: 528   +1,000
All these climate change summits, accords, talks of certain global water rise and we couldn't even block proof of work.
0.2% of world electricity will be saved from a simple change in one virtual coin. That also they did on their own. While the regulators and summit conveners hibernate and looks like will continue to do so.
Damn.
 

Gastec

Posts: 303   +156
All these climate change summits, accords, talks of certain global water rise and we couldn't even block proof of work.
0.2% of world electricity will be saved from a simple change in one virtual coin. That also they did on their own. While the regulators and summit conveners hibernate and looks like will continue to do so.
Damn.
The regulators and summit conveners were busy printing money to give to crypto-miners.