The Ethereum network is congested and the handling fee is high. It is the Ethereum miners who benefit the most.
According to the current currency price, the net profit of the 5700XT 8 card machine is 16.88 USD per day. The static payback period for Ethereum mining is around 240 days the 1660S of the NVIDIA series has only 210 days.
(Note: The time of posting was September 9. The price of ETH at that time was $480. Now the price of ETH has fallen, and the fee income has also decreased. The static return cycle has changed a lot)
From the perspective of the static return cycle, Ethereum mining is extremely attractive.
However, compared to Bitcoin mining, Ethereum mining is more niche, and there are fewer people who know it and actually participate. In today’s article, we compare it with Bitcoin mining to help everyone better understand Ethereum mining.
Mining algorithm, equipment, computing power scale
Bitcoin uses the SHA-256 encryption algorithm. When mining, the competition is computing power. In order to improve its computing power, Bitcoin has gone through four stages CPU mining, GPU mining, FPGA mining machine mining, and now ASIC mining machine mining, with increasing specialization.
Ethereum uses the Ethash encryption algorithm. During the mining process, it needs to read the memory and store the DAG file. Since the bandwidth for reading the inner inch every time is limited, and it is difficult for the existing computer technology to make a qualitative breakthrough in this problem, no matter how the computer’s computing efficiency is improved, the memory reading efficiency will still not be very effective. Big change. Therefore, in a sense, Ethereum’s Ethash encryption algorithm is “ASIC resistant”.
The difference in encryption algorithms has led to a large difference in the scale of mining equipment and computing power between Bitcoin and Ethereum.
At present, Bitcoin mining equipment is mainly ASIC mining machines with a very high degree of specialization. The computing power of a single mining machine is up to 110T/s (Ant S19 Pro mining machine), and the scale of the whole network computing power is 120EH/s the above.
Ethereum’s mining equipment is mainly graphics card mining machines, and there are very few specialized ASIC mining machines. On the one hand, the “ASIC resistance” of the Ethereum mining algorithm increases the threshold for developing ASIC mining machines. After Ethereum is upgraded to 2.0, the consensus mechanism will be transformed into PoS, and the mining machine cannot continue to mine.
Compared with ASIC miners, graphics card miners differ by 2 orders of magnitude in computing power. At present, the mainstream graphics mining machine (8 cards) has a computing power of about 420MH/s, and the Ethereum network has a computing power of about 230TH/s.
From the time dimension of the past two years, Bitcoin’s entire network computing power has grown rapidly, while Ethereum’s entire network computing power has grown relatively slowly.
Bitcoin’s ASIC mining machine is monopolized by several major mining machine manufacturers, and miners can only buy it from the market; Ethereum’s graphics card mining machine, although there are also specialized mining machine manufacturers, miners can also DIY according to their own needs. Purchase parts in the market and then assemble them yourself. Regarding the pit of the graphics card mining machine, especially the self-assembled graphics card mining machine.
The proportion of electricity bills for mining machines
ASIC mining machine has high computing power and high power consumption. For example, the latest Antminer S19 Pro has a rated power consumption of 3250W and consumes 78 kilowatt-hours of electricity per day. According to the current currency price and the electricity price of 0.034 USD during the wet period, the electricity cost accounts for The ratio is 30.68%. Other older-generation Bitcoin ASIC mining machines, such as the Ant T17 series, generally account for more than 50% of electricity costs.
Therefore, ASIC miners are very sensitive to electricity charges. This is Many ASIC mining machines have to be moved from thermal power mines. When the mining output cannot support the electricity bill, the mining machine has to be shut down.
In contrast, graphics card mining machines consume low power and account for low electricity costs. For example, a 5600XT 8 card graphics mining machine, based on the electricity price of 0.053 USD electricity bill accounts for approximately 10.3%.(Note please check your electricity cost first)
Because of the low proportion of electricity costs, graphics card mining machines rarely migrate back and forth every year (another reason is that graphics card mining machines are very “fragile”), and they are generally hosted in year-round electric mines.
Custody of mining machines
Earning the electricity fee difference is the main profit model of the mine. The more electricity sold, the more the mine earns. Bitcoin ASIC mining machines consume high power and are relatively simple to maintain, so they are very popular among mining farms. There are many mining farms to choose from when hosting.
Ethereum’s graphics mining machine not only consumes less power, but is also bulky. Compared with Bitcoin ASIC miners, ordinary graphics card machines occupy an area of 1:3, which means that the space of 3 ASIC miners can only accommodate one graphics card miner.
In addition, graphics card mining machines have high requirements on the environment of the mine. In addition to the most basic dust-proof, moisture-proof, and internal temperature control of the mine, the mine also needs anti-static treatment.
After the graphics card mining machine is restarted, the computing power will generally be lost, increasing the workload of on-site operation and maintenance. Therefore, when choosing a hosted mine, the stability of the mine’s power supply and the ability of operation and maintenance are very important factors for consideration.
Graphics card miners are not welcome in many mines, and there are fewer managed mines to choose from. Generally speaking, when the graphics card mining machine is hosted, the electricity price charged by the mining farm is generally higher than that of the ASIC mining machine.
Mining machine residual value
The chips of ASIC miners are customized and can only mine currencies with fixed algorithms. For example, Bitcoin’s SHA-256 miner can only mine BTC, BCH, and BSV. After the ASIC mining machine is scrapped, it can only be sold as hardware, and the precious metals in the mining machine will be extracted and reused. A scrapped ASIC mining machine hardware can only sell for about 4.38 USD, so the residual value of the ASIC mining machine is very low.
In contrast, Ethereum’s graphics card miners have a high residual value.
First of all, if the graphics card mining machine can’t mine Ethereum, you can switch to other small currencies, and there are many options.
Secondly, even if you do not mine, the graphics card of the graphics card miner can be disassembled, and you can enter the consumer field and sell it to Internet cafes, game players, or companies that need to process a large amount of graphics and images. Generally speaking, for a graphics card that has been dug for two years, the residual value rate is about 30% of the market price of a new graphics card.
In addition, the remaining parts of the graphics card miner (mainboard, CPU, power supply, hard disk, etc.) other than the graphics card can also be reused and have a high residual value, which can generally be sold for 75 to 150 USD.
Block reward and mining period
Bitcoin’s block reward is deterministic, halving on average every 4 years, until 2140, all Bitcoins are mined. After the halving in May this year, the Bitcoin block reward is 6.25 BTC, and the next halving is expected to occur in April 2024. As long as the mining output can cover the electricity bill, miners can continue to dig until 2140.
The block reward of Ethereum was initially 5ETH. In October 2017, the Byzantine upgrade of Ethereum reduced the block reward from 5ETH to 3ETH; in March 2019, Constantinople upgraded, and the block reward was reduced from 3ETH to 2ETH.
The Ethereum 2.0 consensus mechanism will be upgraded to PoS, and all mining machines will not be able to continue mining. There are uncertainties about when to upgrade, how long the mining machine can dig, and whether the block reward of Ethereum will continue to decrease during the upgrade process. At present, the mainstream view in the industry is that Ethereum can be mined for another 1 to 3 years.
The difference in encryption algorithms has led to great differences in mining equipment and computing power between Ethereum and Bitcoin. Ethereum’s mining equipment is mainly graphics card miners, and there are very few specialized ASIC miners.
Ethereum graphics card mines have a low proportion of electrical and mechanical fees, but they are large in size and require high mining environment and operation and maintenance capabilities. Therefore, there are relatively few mines that can be selected when hosting.
The residual value of graphics card miners is high, but Ethereum 2.0 is a potential risk of Ethereum mining. This must be taken into consideration before participating in mining.
Also Read: Top 6 Softwares for Managing Bitcoin Mining