Recently, thanks to the rising ETH transaction fee and ETH 2.0 update progress, in a legendary rebound, the ETH price soared, exceeding $300. Today, we will focus on the top mining concerns, such as the performance, revenue, and mining cycle of GPU miners for Ethereum mining (ETH mining) and the prospects of mining Ethereum.
Compared with second-market investment, what are the advantages of mining Ethereum?
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Revenues of BTC mining remained sluggish after the halving. At present, the payback period of new BTC mining rigs is approximately between 18 to 24 months, which is significantly longer than expected before the halving. On the other hand, after a long round of cost reduction, ETH mining has become extremely popular. The current static payback period of ETH mining is between 10 to 12 months, which has hit the sweet spot for miners.
Based on possible future changes, Ethereum mining (ETH mining) will benefit from three favorable factors this year:
Token price:
The conversion rate of ETH to BTC is at a low by historical standards, which means that the ETH price has been, in a way, underestimated. Compared to BTC, Ethereum will demonstrate stronger performance in the next round of price growth. Meanwhile, the phased launch of ETH 2.0 and favorable DeFi factors can further raise the market expectation for the ETH price.
4GB DAG Size:
Ethereum’s DAG size is set to reach 4GB around November 2020. What this means is that GPUs with less than 4GB of memory will no longer be able to mine Ethereum. According to the previous analysis of the Ethereum hardware market, 50%~60% of Ethereum’s hash rates are provided by GPU miners with 4GB or smaller memory. In other words, if these machines are not upgraded, nearly half of the Ethereum network hash rate will be outdated, and the mining revenue of the remaining Ethereum miners will see a significant increase.
Growing Ethereum hash rate:
In the past few years, for a long time, Ethereum's total network hash rate grows in moderate fluctuations. Although the present Ethereum perks will raise Ethereum’s hash rate, the network hash rate is unlikely to soar as BTC did. Instead, Ethereum is likely to see slow and incremental hash rate growths as the core GPU chips are controlled by the traditional GPU giants AMD and Nvidia.
The logic of comparing ETH mining to BTC mining also applies to the comparison of mining and secondary market investments. Firstly, tokens generated through mining have lower costs. In addition, mining Ethereum is also a prudent investment choice, particularly when hedging strategies are adopted. Secondly, participants in mining receive the twofold benefit of token price rise and machine value growth.
In principle, what are the differences between ETH mining and BTC mining
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Here, we will focus on mainstream Ethereum mining (ETH mining). At the core of the cryptocurrency mining market, there are two major types of mining rigs, namely, the ASIC miner and the GPU miner (FPGA mining and hard drive mining are not considered).
The crucial characteristic of ASIC miners is that they can only mine tokens based on certain algorithms. For example, S19 miners can only mine tokens based on SHA256 algorithm (i.e. tokens like BTC, BCH, and BSV).
On the other hand, in theory, GPU miners can support any algorithm. The only problem is that if a token can be mined by ASIC miners, the use of GPU miners will no longer be cost-effective. At the moment, by and large, Ethereum mining (ETH mining) is driven by GPUs, while BTC mining is based on ASICs.
Therefore, the primary difference between the two lies in revenue and O&M requirements.
In terms of revenue:
one GPU can be used to mine newly-listed tokens in an early stage for excess earnings. This is possible because Ethereum is mostly mined using GPUs that support multiple algorithms. With regards to mining newly-listed tokens, last year, OXBTC’s best payback record is 45 days. GPUs have higher scrap values because they can also be traded in the game market, rendering market, and computation market, in addition to the mining market.
In terms of operation and maintenance:
Since GPUs are larger than ASICs in physical volume, the space required to operate GPUs exceeds that needed to run ASIC miners. Furthermore, GPU miners consist of more complex hardware than ASIC miners, hence, their O&M conditions are less stable. This answers why GPU miners generally require greater O&M costs than ASIC miners.
For Ethereum mining, what is the service life of GPU miners and ASIC miners?
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First of all, it should be stressed that the ASIC miner used for Ethereum mining (ETH mining) out there is not considered a standard miner. At most, they are customized GPU models or multi-GPU integrations. The core chips are still GPU plus video memory. The difference is that these ASIC models have transcended from the original single GPU architecture through systemic remodeling that brings higher cost performance.
The reason why no real ASIC miners were developed for Ethereum mining (ETH mining) is because of the token’s algorithm, ETHash, which is a memory-intensive PoW algorithm with high memory requirements. As such, developing an ASIC miner based on this algorithm is very challenging. With ETHash, the mining files are loaded into the video memory. Considering GPUs are equipped with video memory chips, GPU miners are better choices than ASIC miners. Though the latter can also stack up video memories, the cost would be enormous.
Furthermore, ever since April 2018, the Ethereum community(ETH community) has started the discussion on preventing the possible take-over of Etherum by ASIC miners. Although no decision has been finalized until this year and some members of the community disagree with the proposal, we cannot ignore the possibility that the proposal may be implemented, which will be lethal to the ASIC miner used for Ethereum mining (ETH mining).
In our opinion, the prevalent customized GPU models like INNOSILICON Miners and AntMiners are not the best choice. This is the case because they have lost many GPU advantages. Firstly, compared to the regular GPU miner, these models are not much better in terms of power consumption and cost performance, and their scrap value is far less. In addition, when trying to mine newly-listed tokens in the early stage, the regular GPU miner is superior to these models. Miners can be assured that this type of mining rig will have little impact on the GPU market as the supply is very limited.
In principle, what are the differences between ETH mining and BTC mining
Here, we will focus on the payback period of Ethereum mining (ETH mining).
Given that the daily net mining profit equals the mining revenue minus the electricity fee, we will focus on two aspects. The first consideration is the mining revenue, which depends on the stability and mining power of the rig. When the Ethereum network hash rate and token price remain the same, rigs with higher hash rates and greater stability will generate higher mining revenues. The second aspect is the electricity fee, which relates to the machine's power consumption and the electricity price.
Therefore, to obtain higher daily net mining profits, miners need to raise the mining revenue and lower the electricity fee.
The payback period equals the machine cost divided by the daily net mining profits. Cheaper machine costs and higher daily net mining profits mean that the payback period will be shorter and mining will be more cost-effective.
Where is the OXBTC hosting farm? How about its superiorities?
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The mining rigs of OXBTC are now hosted in the GPU operation and maintenance center located in Karamay, Xinjiang under the management of OXBTC’s official partner Halley Mining. Among the many farms of Halley Mining, this 100% GPU farm ranks top in terms of robust operation and maintenance. (In general, mining farms are their 100% BTC farms or BTC & GUP mixed farms, and 100% GPU farms are rare.)
Reliable and long-term operations
Started as a mining farm in 2014, Halley Mining is highly experienced in building, operating, and maintaining mining farms, especially those dedicated to GPU mining. Given that GPU mining is more demanding in terms of facility, staff, repair, and maintenance, thanks to its partnership with big-name manufacturers, OXBTC has many advantages for GPU hosting.
When selecting the mining facilities, OXBTC conducts comprehensive and systematic assessments with weighted ratings that incorporate the electricity price, power load, safety policy, high-voltage system, facility construction, site survey, cooling system, drainage, and low-voltage system. The careful inspection and scrutinous decision-making help OXBTC minimize the risks involved in the site selection and construction of mining farms.
Mature process of monitoring of farm O&M
Back in 2014, Halley Mining’s monitoring and management of its farms were primitive and manual. After 6 years of growth, Halley Mining’s monitoring of farm O&M has become semi-automated and automated. Relying on the farm monitoring and assessment system developed by the Halley Mining team, all on-site O&M staff can monitor the mining operations of machines in real-time. Once a problem arises, they can locate the problematic machine for prompt response measures. At the same time, the management staff of the farm and the headquarter can check the work of each O&M staff at any time By linking remuneration with KPI, Halley Mining guarantees effective O&M performance.
At present, to offer careful operation and maintenance, Halley Mining manages the GPU miner based on five major indicators: runtime rate, rate of machine reaching the standard, online hash rate performance, total hash rate performance, and theoretical total hash rate performance.
Highly efficient maintenance
In terms of maintenance, Halley Mining will set up a professional maintenance team at each farm. In addition, we have created a maintenance office at the headquarter in Shenzhen, which ensures that the damaged rigs are handled promptly. To fully ensure the interests of the user, Halley Mining makes sure that minor repairs are done instantly on the farm; and major repairs are handled in the headquarter with professional support, high cost-performance, and increased stability. Reliable repairs are critical as the GPU miner has higher failure rates than the ASIC miner. At Halley Mining, thanks to years of team-building efforts, nearly all O&M staff in farms are skilled at basic repairs.
Below are real pictures of the farm taken this morning. The pictures may not look very appealing as they were taken by our O&M staff using a smartphone.
When ETH 2.0 is launched, can GPU miners and ASIC miners still be used to mine Ethereum?
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With its upgrade to ETH 2.0, the Ethereum network (ETH network) will shift from PoW to PoS. By then, Ethereum mining (ETH mining) may no longer be possible; yet that will not happen until Phase 1.5.
According to information released by Vitalik Buterin, the Beacon Chain will be launched in November this year, which will mark the beginning of Phase 0. Right now, Ethereum did not release any specific timetable for the subsequent Phase 1 or Phase 2. Plus, such a complex ecosystem migration is also subject to a great number of uncertain factors.
We believe that it will take at least 3 years for Ethereum to release Phase 1 and Phase 2. In addition, the interest of Ethereum miners will be a key consideration as Ethereum balances its ecosystem. Before the full launch of ETH 2.0, many unexpected factors may still arise.
Moreover, in the era of PoW, hash rates mean everything. Regarding public chains and their ecosystems, the enormous GPU hash rate market will attract more new first-rate public chain projects. As the market further matures, it will see the rise of new cryptocurrencies, such as ETC. At the same time, owners of GPU miners can always make the switch from mining to the traditional game market and computation market, given that GPUs can also be used in non-mining usage scenarios.
