Major mining companies are increasing their investments in Ethereum mining. Despite Ethereum’s imminent switch to proof-of-stake (PoS).
The Hard Fork London of the Ethereum network has already started, including a series of changes that are expected to revolutionize the future of the cryptocurrency in a certain way.
While the London Hard Fork brings the network one step closer to Ethereum 2.0, significant updates throughout Ethereum’s six-year history have a history of multiple delays.
For example, the Constantinople upgrade, which was a key step towards Ethereum 2.0, was originally scheduled to go live in July 2018. However, a bug in its code delayed its implementation until February 2019, leading to further delays in the update. migration.
For better understanding, Constantinople is primarily defined as a maintenance and optimization upgrade. Because it introduces small improvements that won’t make a big difference to the end users of the network. But they will be highly technical on the efficiency of it and the fee structure, as well as updates that pave the way for Ethereum’s anticipated scaling roadmap..
Ethereum miners make a multi-million dollar bet
An example of this is the Bitcoin Hut 8 and Hive Blockchain mining companies . That they are increasing their capabilities to mine Ethereum, the second largest cryptocurrency by market capitalization.
« This operation serves to strengthen Hut 8’s objective of increasing revenue diversification. And to drive immediate short-term and long-term revenue growth goals forward in fiscal 2021. »
Meanwhile, miner manufacturers like Bitmain and Innosilicon are set to release new Ethereum miners later this year.
As a side note, this investment may seem strange, given that the Ethereum system is anticipated to migrate from PoW to PoS in four months. And PoS mining does not require such advanced machines.
Incidentally, the surge in demand could be attributed to expectations that the migration will be delayed, industry professionals said.
In this regard, Mark D’Aria, CEO of Bitpro said: « We were told that mining was going to end four years ago. And it still goes on. It’s always been a wait-and-see approach, things tend to take longer than everyone expects .»
An ‘Ice Age’ for miners
Ethereum developers initially introduced this EIP in 2015, but it has been postponed until December 2021.
The move to Ethereum 2.0 will see the de facto migration to a proof-of-stake (PoS) model that requires users to leverage their existing Ethereum cache as a means of verifying transactions and mining new tokens. This will still limit the amount of new coins created, but without requiring the massive expenditure of energy via PoW.
According to Nic Carter, general partner at Castle Island Ventures and co-founder of Coin Metrics, the goal of the difficulty bomb is to force miners and node operators to update their software after a certain time has elapsed.
According to Ethan Vera, COO of Seattle-based mining company Luxor: » As the price of Ethereum increases, it may become more difficult to transition the network to PoS .»
« Even those who are optimistic about the transition from Ethereum to PoS still want to go slowly to ensure that things are being done correctly. And that there aren’t any potential hesitations, pitfalls, or blind spots that the developers are missing .»
To conclude, according to Vera: « The exact date of the historical migration of Ethereum to PoS is unknown. But a timely investment in Ethereum mining could bring huge profits ».
I close with this quote from Ethan Vera: « The miners who bet against PoS two years ago made an absolute killing spree. If you can bet against that, the return could be quite lucrative .»
Ethereum supply turns into deflation
Ethereum supply briefly turns to deflation as gas fees skyrocket. In fact, rising gas fees and ETH consumption rates have so far produced nearly 800 deflationary blocks.
Specifically, an increase in Ethereum’s transaction burn rate has resulted in at least two hours where the supply was deflationary. The network has been under a heavy load in recent days, causing much more gas to be flared.
Ethereum supply briefly turns into deflation
By the way, a few hours ago the “ETH Burn Bot” recorded a case where 545 ETH was burned in a period of one hour. Which resulted in the asset seeing a deflation of minus 13 ETH during that short period.
We could say that when the amount of ETH burned is greater than the mining reward, deflationary blocks occur and the supply temporarily decreases.
In this regard, the tracker of the consulting company Carbono reports that there have currently been 791 deflationary blocks.
Hard Fork London
When the London Hard Fork went live on August 5, it introduced the long-awaited EIP-1559 update. Which adjusted the transaction fee calculation system. It aims to enable the Ethereum improvement proposal that will bring significant changes.
The network in particular has faced multiple issues, from gas fees to escalation in the past, but this would help relieve some pressure on the network. Although EIP-1559 will not exactly reduce transaction costs. It will make the cost of a transaction more predictable and possibly result in lower costs for users.
Specifically, the long-awaited Hard Fork London is already making its mark. Just a few days after its launch, the community is witnessing an increase in the network transaction fee. However, this only lasted a couple of hours. Even so, the rate of fare burn has led to a deflationary offer.
According to ultrasound.money , at the time of writing this article, 27,543 ETH have been burned. At current prices, this works out to about $80 million in just under a week.
In this regard, the Canadian investor Kevin O’Leary, also known as «Mr. Wonderful”, considers EIP-1559 to be the best of Ethereum so far.
Likewise, Mark Cuban said: “ Obviously, with EIP-1559, everything changes. What happens in the future is going to really impact how people perceive it specifically as a store of value .»
Likewise, former Zcash CEO Josh Cincinnati stated: “ I think EIP-1559 is pretty good, but anyone making predictions about ETH supply thanks to EIP-1559 will be wrong, either way .”
As for the price of ETH, it is currently showing bullish signs. Trading above $3,200. This is recorded by our internal Crypto Online tool
To conclude, while this is a great rally for Ethereum, some analysts are still skeptical about a massive bull run. By the way, this is not to say that ETH will not see a massive bull run, what do you think about that? Let me know in the comment box.
I close with this phrase from Perry Kaufman: « If you do not execute all the signals of the trading system, do not expect to obtain the results of the system ».