Ethereum miners are rushing to sell their GPUs

major update to the Ethereum network will make it less convenient to mine this cryptocurrency. This means that many people who bought Nvidia’s latest graphics cards for more cumulative computing power are selling their GPUs on the second-hand market to get back as much of their initial investment as possible. Normally it can take even more than a year to return to the initial investment, which in addition to the purchase of the physical GPU also includes the time it takes to mine Ethereum and therefore the energy required to do so.

In July, the update (identified as EIP-1559) will significantly reduce fees. This is a step forward in the transition from the Proof of Work protocol to the Proof of Stake protocol, in turn, part of a broader process of transformation of the Ethereum network that aims to make it more sustainable and more scalable.

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Difference between Proof of Work and Proof of Stake

In the case of the Proof of Work (literally a proof of work) we speak of a cryptographic proof with which you must demonstrate that you have done a job necessary to secure the network. It is a complex mathematical job and therefore requires complex hardware, like many high- end graphics cards . Proof of Stake, on the other hand, changes the paradigm: it is a system that requires you to block a share of Ethereum (called “staking”) to activate the validation software. The principle behind it is that if a user decides to block a large share of ETH (which can be worth tens of thousands of dollars), then he is interested in advancing the network. It is estimated that the introduction of the Proof of Stake protocol will reduce the computational computation required by 99.98% compared to the current protocol. In fact, mining will no longer be necessary and we will talk about staking for the validation of the main Ethereum network; therefore, the graphics card market should find its balance and become focused on video games.

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The move to Proof of Stake took many years to develop. As Ethereum is based on a decentralized network, there is not a single company that can decide for all members: there have been many discussions involving many interested actors.

The path to the Ethereum 2.0 network

Furthermore, the Proof of Stake protocol is part of a further transformation of the Ethereum network. If today the blockchain can be imagined as a sequential network, the goal is to transform the blockchain into a large set of block chains , taking advantage of the sharding system (from “shard”, splinter). Each new chain will become a “shard”: the network will be more fragmented. This will allow you to better distribute the workload and increase the number of possible transactions every second. Each shard will have the same characteristics as the main network and will allow you to manage transactions and smart contracts.

From December 2020 a secondary network is available that uses the Proof of Stake protocol and called the beacon chain. As explained on the Ethereum website, “ when ready, the main Ethereum network will be ‘hooked’ by the beacon chain, becoming a shard that uses Proof of Stake instead of Proof of Work “.

However, a final date for this merger is not yet foreseen. It was originally planned for 2018, but the entire community behind Ethereum preferred to postpone the transformation. Once the merger is complete, the Ethereum network will have immense scalability, will be safer and more sustainable, objectives envisaged by the vision proposed years ago.

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Wilbert Price

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