Similar to Bitcoin, Ethereum uses mining, an energy-intensive process, to create and distribute the cryptocurrency. Many people around the world, also known as miners, use machinery in an attempt to solve computational problems and make ETH. However, sometime next year, the cryptocurrency is expected to undergo a major update. This update will drastically influence the network’s operation and the creation of ETH. Ethereum mining will become obsolete. So what will happen to all Ethereum miners?
In 2008 when the Bitcoin whitepaper saw the light, the cryptographic concept was implemented. This concept introduces a way of making a decentralized network safe and reliable for sending money. It is also known as “proof of work (PoW).” The blockchain on which runs Ethereum uses the same consensus protocol. It is a way to ascertain that computers are in agreement on the transactions and the status of the database at all times. While proof of work is an algorithm, mining can be considered work itself. It is the process of adding new valid blocks to the chain. There is a common critique that comes from environmental activists against cryptocurrencies, as the process of leveraging computing power uses a lot of electricity.
Ethereum’s developers are currently working on altering the network’s consensus protocol to proof of stake (PoS). PoS requires less electricity for maintenance, although it allows much more transactions. Ethereum 2.0 will retain security through users pledging their tokens. Attacks can be avoided as bad actors will have their deposits expropriated. When the chain makes its transition from PoW to PoS, mining will be no longer available. However, miners with decent cash flow most likely will resort to playing the long game by holding ETH and wait for the price to grow. However, it doesn’t mean that everyone will be happy with this change.
The update that Ethereum undergoes will change how and how much miners will be paid. The transaction fees will no longer be assigned to miners. Instead, it will be sent to an address no one can access. Miners will only receive newly minted ETH as a reward. The reduction in the supply of ETH should increase demand and the coin price, arguing the Ethereum Improvement Proposal (EIP) 1559 supporters. EIP-1559 defines the game for the merge as it represents the point when miners will start leaving the Ethereum network. In any case, the network is abandoning mining in the near future. However, miners who prematurely leave the network risk missing a big payday. It is peculiar that SparkPool, which controls around one-quarter of the hash rates, is against EIP-1559. They call it “wealth distribution” and “a tyranny of the majority.”