Indian crypto miners worried as Ethereum moves to Proof-of-Stake
Ethereum’s transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) consensus mechanism has left Indian cryptocurrency miners worried. This is because all the GPUs that are being used to currently mine Ethereum will be useless as the Ethereum blockchain comes closer to The Merge.
The Merge will come into full effect starting September 15, when Ethereum changes its underlying algorithm that validates (verifies) transactions. It will force the network’s mining industry — which according to research firm Messari is worth $19 billion — to find other ways to make money. The current mechanism, PoW, requires specialised computers to verify every transaction that happens on the Ethereum blockchain.
“What happens to our GPUs?” asks 23-year-old Pawan Hegde, a Mumbai-based crypto miner who only mines Ethereum on his NVIDIA and AMD graphic cards. “This is a matter of concern, after all, it is a $19 billion question,” he says.
Crypto miners run GPUs, for which they are rewarded with some Ethereum, in the form of incentives. After the Merge happens, crypto miners will no longer be required to use their GPUs to verify transactions. Instead, they will have to stake some of their cryptos in a mining pool, which will run only a single device. “I don’t see any other option, I might sell my GPUs and put an end to mining,” Pune-based crypto-miner Sarthak Jain, 32, says.
The big question is what made Ethereum the best cryptocurrency to mine. It is because of an algorithm called “Ethash”, which makes mining much easier than other coins like Bitcoin. “Ethereum mining is always profitable even with a regular computer, on the other hand, Bitcoin mining uses specialized ASIC computers that are a burden to acquire,” Hegde adds.
Some miners are also looking out for other business options that require computation power and put an end to the crypto mining business. “While we could mine other tokens like Ethereum classic (another Ethereum token that will continue to work on PoW) but the major concern is the profitability will go down by 10 times,” Pardeep Narwal, founder of New Edge Soft Sol, an IaaS firm based out of Rohtak told indianexpress.com.
The major concern that miners raise is that PoS is not fully decentralised. “Anyone willing to stake (put their cryptos in a pool) will have the power to verify transactions now,” Narwal added.
Crypto miners also believe that PoS could lead to the centralisation of the blockchain ecosystem as they would be able to stop a particular address from performing transactions on the blockchain. “While this could reduce crypto scams to some extent but will make the crypto business centralised, something that the underlying technology i.e blockchain, aims to eradicate,” Hegde notes.
Another crypto miner, Jyotirmay Ray, argues that while the “profitability will decrease but so will the energy consumption”. He believes that “cards (GPUs) required to run mining operations will never be useless.” He adds that he will now move to mine other coins like Argo, Pearl, and Ethereum Classic. “Nothing beats Ethereum, but there is no doubt that PoS will affect the crypto mining industry and only the future will decide our fate.”