Miners Won’t Be Able To Work For Much Longer With Ethereum, According To A Market Analyst Alex Kruger
The bearish market has already brought down faith in Bitcoin for many users, and their mining scene isn’t doing too swell either. Their proof-of-work protocol has already broken even three times, leaving skeptics with plenty of ammunition against them. A perfect example of this problem was featured in an op-ed piece by a MarketWatch contributor, who commented that the hashrate difficulties and more was imposing a slow death on the coin.
Even though many crypto enthusiasts have debunked it, there are many that still believe that crypto mining is a problem. Specifically, Ethereum seems to be the subject of plenty of analysts’ predictions, especially considering their transaction processes. Just as Bitcoin had to bite the bullet and take the attack, Ethereum is up next.
CNBC gathered data from Susquehanna, a crypto-friendly trading group, which said that small-scale mining operations are unrealistic. The average miner with a graphics card has almost no chance of profiting, even though the high was once $150 in the middle of 2017. Christopher Rolland from the group noted that even the most recent miner launched isn’t providing much of a return on investment.
Based on this information, it isn’t that far-fetched to assume that miners associated directly with ETH may not be able to even process blocks soon, unless they are performing big jobs. Tim Copeland, a writer for DeCrypt Media, isn’t going to take these attacks lying down, promptly saying, “Ethereum miners are still running strong.” However, Deutsche journalist Peter Statsenko quickly shot him down, saying that the only way for Ether mining to break even with an electricity rate of $0.15 per KWH. Considering that there are many companies below this figure, miners will most likely continue hashing with their rigs.
Most countries find it hard to get cheap electricity and choosing to mine in those areas is hardly worth the cost. Japan’s electricity rate, for instance, is about $0.26 per KWH, which is much higher than the level that miners can profit at. As such, the data on Ethereum’s hash rate on their network has shown that many retail miners have withdrawn.
Presently, Ethereum’s mining future isn’t looking grand, and analysts in the market are making it look like the slaughter is just beginning. Alex Kruger, who is generally crypto friendly, noted that the miners left won’t necessarily do well. Explaining through a string of Tweets, Kruger started off by saying,
“$ETH mining operational breakeven, paying $0.06 $/kWh for electricity, currently stands around $67 (estimates depend on operational costs other than electricity). For those buying 2nd hand RX580 GPUs and depreciating them in 1 year, breakeven after depreciation stands at $165.”
He went on, bringing up the upcoming Ethereum upgrade on January 16th called Constantinople, which would reduce the block rewards, going from 3 to 2. He said, “That would increase a $67 breakeven to $101, sending more marginal miners out of business (which is short term bearish as such miners liquidate inventories in the process).” Continuing, he noted,
“The increase in breakevens is not bullish on itself. Price does not follow breakevens, and in crypto breakevens do not represent a floor. However, once mining is past the initial (painful) adjustment period, less mining supply mined by fewer miners will be decidedly bullish.”
While investors may be excited about the inflation for Ethereum, miners won’t have the same joy. Right now, the only thing to do is wait for January 16th.