Ethereum mining has been a hot topic in the crypto space for years now. As Ethereum transitions to a proof-of-stake consensus model with the Merge update, there are questions around how long Ethereum mining will continue to be profitable and viable.
In the opening paragraphs, we’ll provide a quick overview of what Ethereum mining is, why it is currently needed, and how the shift to proof-of-stake will impact miners. We’ll also outline some key questions we aim to answer in this comprehensive guide on how long Ethereum mining will last.
What is Ethereum mining?
Ethereum mining is the process of verifying Ethereum transactions and creating new Ethereum blocks using specialized computer hardware and software. It involves solving complex computational math problems in order to validate blocks of transactions and add them to the Ethereum blockchain.
Miners who successfully verify a block receive a reward in the form of newly minted Ether tokens plus gas fees paid by transactors. This provides the economic incentive for miners to dedicate computing power to the network.
Why is mining currently needed?
Ethereum currently operates on a proof-of-work consensus mechanism that requires mining. Proof-of-work relies on miners competing to solve complex cryptographic puzzles in order to validate transactions, secure the network, and earn rewards.
Mining is essential for adding new blocks to the chain, processing transactions, minting new ETH, and overall network security. It will continue to be critical for the Ethereum network until the full transition to proof-of-stake with the Merge.
How will the Merge impact mining?
The Merge refers to Ethereum’s upcoming transition from proof-of-work to proof-of-stake consensus. This means that mining will no longer be needed for validating transactions and maintaining network security.
With proof-of-stake, validators will stake ETH to secure the network instead of utilizing computing power. The Merge is expected to take place in 2022 and will effectively end Ethereum mining and the rewards associated with it.
Key questions we’ll answer
In this article, we aim to answer the following key questions about the future of Ethereum mining:
- When is The Merge expected to take place?
- Will mining immediately end with The Merge?
- Will Ethereum Classic mining still be possible after The Merge?
- Are miners preparing to switch to other networks?
- How long can mining remain profitable as difficulty increases?
- Could any delays in The Merge timeline extend mining duration?
Examining these questions will help us estimate how long Ethereum mining will remain viable and profitable leading up to and after The Merge transition.
When is The Merge expected to happen?
The Merge has been in development for years, but the official launch date has been recently narrowed down to sometime around September 2022 based on estimates from Ethereum developers.
Here is an overview of The Merge release timeline:
Q2 2022: Testing and audits
The Merge first underwent testing on the Kiln and Ropsten testnets in June 2022. This allowed developers to observe performance, identify bugs, and test the transition’s functionality.
No issues were identified, so The Merge has now progressed to third-party auditing from specialists like Trail of Bits. Auditing provides external validation of the update’s security and readiness for mainnet deployment.
Q3 2022: Tentative launch on mainnet
Provided all audits and tests go smoothly, developers are currently targeting a mainnet Merge deployment in September 2022.
The exact date has not been finalized but will be announced well in advance. Developers have stated they will not rush the transition before proper testing and auditing is complete.
How the upgrade will roll out
The Merge will activate at a specific terminal block on the proof-of-work chain. Once this block is reached, execution layer transactions and data will pivot from being validated by miners to being validated by stakers in real time.
This terminal block will dictate the official end of Ethereum proof-of-work mining. However, the upgrade will roll out in stages and mining is not expected to end immediately after this point (more details below).
Will mining cease immediately with The Merge?
No, Ethereum mining will not immediately end at the moment of The Merge’s terminal block activation. This is due to a built-in delay designed to ensure a smooth transition.
Here is an explanation of how the end of mining will roll out in stages:
Stage 1: Terminal block hits and mining ends on Layer 1
When the pre-determined terminal block is validated, proof-of-work mining will officially stop producing valid blocks on Layer 1. The Ethereum execution layer will fork off from the original proof-of-work consensus model onto the new proof-of-stake Beacon Chain.
Stage 2: Delayed mining difficulty drop
For approximately 2 weeks after the terminal block, Layer 1 blocks will still be produced but the difficulty will remain high, so mining will no longer yield block rewards.
This is intended to allow time for miners to voluntarily exit mining operations.
Stage 3: Mining difficulty drop and cleanup
Once the difficulty delay elapses, the mining difficulty will substantially decrease. This makes mining blocks easy and fast to ‘clean up’ any remaining computational activity.
Miners will only earn block rewards during cleanup. This cleanup phase will last roughly 2 weeks before mining becomes obsolete.
Mining will taper off over approximately 1 month
In total, profitable Ethereum mining is expected to taper off over approximately 4 weeks following the terminal block merger. This gradual descent into unprofitability helps reduce disruption.
The blank blocks mined during the difficulty delay also provide a useful source of income for miners as they wind down operations.
Will Ethereum Classic mining remain possible?
Ethereum Classic (ETC) is a separate blockchain that forked from Ethereum’s original proof-of-work chain back in 2016. Unlike ETH, ETC will continue using proof-of-work consensus even after ETH transitions to proof-of-stake.
This means that while ETH mining will end, ETC mining will remain viable for the foreseeable future.
However, the profitability and revenue potential of ETC mining is likely to decline significantly once ETH, the world’s second-largest blockchain, departs proof-of-work.
Here are some key points on post-Merge Ethereum Classic mining:
- ETC mining difficulty is likely to decrease along with hashrate as ETH miners switch over or power down rigs. This will make ETC mining easier.
- Less overall competition will mean ETC miners earn a higher share of mining rewards. However, total revenue is likely to decline.
- Reduced profitability could prompt some miners to shut down ETC operations. But mining will remain possible for dedicated ETC miners.
- In the long-term, ETC mining economics could improve again if miners flocking from ETH raise difficulty and interest.
While ETC mining remains viable post-Merge, it will struggle to match the revenue and hashrate currently seen from ETH. The loss of the world’s largest proof-of-work network will impact ETC mining economics and profitability.
Are miners preparing to switch networks?
Many Ethereum miners have already begun migrating hashpower and rigs to other networks to prepare for the imminent end of ETH mining revenue.
The most popular networks targeted by transitioning Ethereum miners include:
Ethereum Classic (ETC)
ETC is the obvious choice for ETH miners looking to redirect their hashpower. The Ethereum Classic network runs on the same ethash mining algorithm as ETH using the same hardware.
This makes migration easy – ETH miners can switch over and immediately begin mining ETC without any equipment changes. ETC mining also has the benefit ofPinkremaining viable long-term.
However, ETC has a much smaller market cap and network size than Ethereum, so miners will be competing for lower overall rewards.
Ravencoin (RVN)
Some miners are opting to migrate to Ravencoin, another GPU-mineable network. Ravencoin operates on the kawpow algorithm, so ETH miners will need to modify GPU settings to optimize performance.
Ravencoin has surged in hashrate in 2022 amid Ethereum miners pivoting in preparation for the Merge. But rewards are distributed across a larger mining pool, decreasing individual profitability.
Ergo (ERGO)
Ergo is a newer GPU-friendly network that operates on the autolykos mining algorithm. It has attracted interest from ETH miners seeking an AMD GPU-optimized network with lower competition.
However, Ergo’s small size and low trading volumes result in relatively low liquidity and mining profitability. Significant miner migration could improve this outlook if adoption expands.
Conflux (CFX)
Conflux is one of the few networks supporting merged mining across multiple chains. This enables ETH miners to simultaneously mine CFX and ETH while the latter remains possible.
Once ETH mining ceases, Conflux provides an option to continue mining its native CFX token with no hardware changes required. But merged mining is ending soon, diminishing the ease of transition.
Miners are testing options
Many miners are still exploring and comparing their options for redirecting hashpower once ETH mining stops generating revenue. Smaller networks with emerging investment from miners include Flux, Aeternity, and Beam among others.
Most miners splitting operations across backup networks in preparation for the wind down of ETH mining over the coming months.
How long can ETH mining remain profitable?
Ethereum mining profitability relies heavily on factors like mining difficulty, hashrate, gas prices, and ETH exchange rates. As The Merge approaches, certain trends are impacting the remaining profitability window:
Difficulty hitting all-time highs
The difficulty of mining a block on Ethereum is quantified by a difficulty value that adjusts dynamically based on network activity. This difficulty has been skyrocketing toward all-time highs in 2022 as interest in mining ETH until the Merge peaks.
Higher difficulty requires more computing resources to earn mining rewards. ETH mining revenue minus electricity costs is decreasing as a result of the climbing difficulty.
Hashrate growth slowing
The Ethereum network hashrate – a measure of the total computing power devoted to mining – has also been ramping up to record levels above 1,000 TH/s in anticipation of the Merge.
However, hashrate growth has started leveling off, indicating miners are no longer expanding operations as the Merge nears.
ETH price and gas fees volatile
While higher ETH prices and gas fees can improve profitability, values for both have been highly volatile recently. This has made it less predictable to rely on market conditions enhancing mining revenue.
With these factors creating downwards profit pressure, ETH mining is projected to remain moderately profitable at current levels for approximately 5-8 more months.
Here are the key drivers that will end ETH mining profitability:
The Merge terminal block hits
Once the official Merge block is mined and transition begins, mining rewards will halt on Layer 1 even as difficulty remains high. This instantly eliminates profitability.
Mining difficulty adjustment 2 weeks post-Merge
The difficulty bomb – a hard fork that will significantly lower mining difficulty – is expected around 2 weeks after the Merge. This will be the final nail in the coffin for ETH mining rewards.
Profitability outlook
Based on projections, ETH mining will likely remain modestly profitable through early 2023 prior to The Merge. But individual situations vary considerably based on electricity costs, taxes, and other factors. Some miners may shut down prior to terminal block if profit margins become too slim.
Could any delays extend the mining duration?
It is unlikely at this point that there would be any major delays impacting the projected Q3 2022 Merge timeline based on developer statements.
But if any issues did emerge causing a setback, it would theoretically extend the active lifetime of Ethereum proof-of-work mining by a corresponding period.
Here are some hypothetical scenarios where a delayed Merge rollout could prolong mining duration:
Security vulnerabilities discovered
If audits and bug bounty programs unveiled security flaws or vulnerabilities in the Merge code, fixes may necessitate pushing back launch. Any major vulnerabilities would likely add several months at minimum.
Synchronization issues
Ethereum clients and testnets successfully synchronized execution layer blocks with the Beacon Chain during testing. But mainnet synchronization theoretically carry risk of complications that stall the Merge.
Critical bugs in upgrades
Recent prerequisite upgrades like Bellatrix implemented key changes needed for the Merge. But undiscovered bugs may create issues necessitating reverting upgrades and delaying transition.
Stage deployment roadblocks
The Beacon Chain and proof-of-work chain need to maintain compatibility through the staged aspect of the upgrade roll out. Failure modes at each phase could hinder progression to full proof-of-stake.
Would delays be impactful?
While unlikely, small delays ranging from a few weeks up to 2-3 months would not substantially alter projections for Ethereum mining’s end. The transition may wrap up toward the end of 2022 as opposed to the third quarter.
But any setbacks greater than 3 months could extend the profitability window into 2023 for miners. And problems causing half a year or more of delays may incentivize miners to continue operating through next July.
Although highly improbable, an extremely unlikely worst-case scenario delaying The Merge by a full year would grant ETH miners a lengthy additional period of rewards.
Conclusion
In summary, Ethereum proof-of-work mining is projected to begin tapering off in Q3 2022 leading up to the official Merge launch and terminate fully around 5-8 months later in Q1 2023 following the difficulty bomb adjustment.
This transition is expected to transpire without any major delays based on smooth testing and a tentative September 2022 Merge timeline. While Ethereum Classic and some other networks will remain mineable, the end is in sight for ETH mining rewards within approximately one year.
Miners still have a moderate profitability window through early 2023 to operate their rigs before returns drop off. As the Ethereum ecosystem transitions toward a more sustainable and scalable proof-of-stake model, there will be plenty of notice given to miners to prepare and migrate hashing power where possible.
While mining served as a crucial bootstrapping mechanism for Ethereum in its early proof-of-work days, the next chapter for Ethereum will be defined by energy efficiency, lower barriers to entry, and wider participation as ETH holders are empowered to help secure the network.