Miners searching for new blockchains in the wake of Ethereum’s Merge are struggling as intense competition for blocks reduces profitability.
With Ethereum’s move away from proof-of-work based GPU mining to a proof-of-stake based consensus mechanism, many of the miner operators who formerly supported the world’s second-largest blockchain network are moving to other PoW networks like ETC and RVN.
But with the eager embrace of new miners to these networks comes a rise in block difficulty that, at current market conditions and energy costs, is making it difficult for GPU miners to turn a profit, according to Ben Gagnon, chief mining officer at bitcoin miner Bitfarms (BITF).
“GPU #mining is dead less than 24 hours after the #merge,” Gagnon tweeted, adding that three of the largest chains that utilize the mining method offer negligible profits and that “the only coins showing profit have no marketcap or liquidity.”
Rising hashrates, falling profits
As the hash difficulty of networks like ETC and RVN continues to rise, profit among competing miners has driven down potential rewards. On ETC block rewards fell from a 24 hour average of around 58 cents to just over 1 cent, while rewards for blocks on RVN fell from a 24 hour average of $1.77 to just over 4 cents in more recent hours according to Minerstat data.
“Even running new generation hardware at sub 3 cent power is not profitable on ETC now,” tweeted Ethan Vera, COO of Luxor, which runs an Ethereum mining pool.
Without a profitable network to mine, as many as 20% to 30% of miners have simply shut down operations according to Vera.
Vera had previously estimated that only miners contributing around 100 terahash per second to the Ethereum network would find a home on other blockchains, citing a need for state-of-the-art hardware and low electricity prices to remain competitive.
Now, it would appear that even the latest hardware rigs and cut-rate energy costs may not be enough to turn a profit on networks like ETC, where as much as a 280% rise in hash rates occurred over the last 24 hours.