Lunar Digital Assets CEO: Ethereum’s Constantinople Hardfork Can Signal the Death of GPU Miners
Ethereum’s Constantinople hard fork scheduled to take place later in the month will come with some irreversible repercussions. According to Han Yoon, the chief executive of Lunar Digital Assets, Ethereum mining won’t be the same again – not due to the falling profit margin, but because of the expected end of Ethereum mining.
Just published an in-depth article regarding the upcoming hardfork and the economic + centralization repercussions it can have on the future of #Ethereum. Someone posted the article on r/Ethereum and was trending at the #4 spot on the frontpage, but the mods decided to censor it.
— Han #TeamLunar (@hanyoon) January 9, 2019
Although it was expected that this fateful day would finally arrive, considering that Ethereum has clearly stated its intent to switch to proof-of-stake consensus, Han Yoon still believes the decision made for the hard fork will come with dire consequences for the Ethereum miners. He said that:
“We all knew that mining Ethereum would soon come to an end; it’s in Ethereum’s roadmap to switch to a Proof of Stake consensus. And although Ethereum will still be mineable until that fateful day in which PoS comes, some decisions made for this hard fork will have dire consequences for Ethereum miners.”
Impact Of Ethereum In The GPU Mining Industry
Ethereum represents a big image in the GPU mining industry. By 2017, it was easy and very profitable to mine the cryptocurrency, and anyone – from a hobbyist with a small budget to gamers with strong GPU cards – could hack it.
According to Yoon, such golden days are not with us anymore. 2018 was a tough year for the crypto market, and miners suffered a great deal. Plenty of mining facilities had no option but to shut down, some temporary and others permanently.
Difficult Times Ahead
This year, the scheduled hard fork scheduled to happen at block number 7,080,000 is expected to implement five Ethereum Improvement Proposals (EIPs). However, as it stands, Yoon noted that Ethereum GPU miners are working on a thin margin, with a $2,000 mining rig generating only $20 per week when you factor in average electricity rates.
He noted that in a time when miners are already contemplating whether to mine Ethereum or not, the coming hard fork could discourage them even further from mining the cryptocurrency because of reduction in block rewards. He explained that:
“At a time when there are so many miners on the fence whether to mine or not, a 33% reduction in rewards will absolutely positively sway them away from Ethereum mining. Miners that are breaking even will suddenly be at a sharp loss, again moving them away from Ethereum.”
Yoon further added that:
“The departure of thousands of miners from Ethereum will have ripple effects throughout the entire mining industry… Simple economics tell us that this will displace a lot of GPU miners, further consolidating the power of ASIC miners.”