What You Should Know About Mining Ethereum in 2021.
ether Mining goes away. Not today, not tomorrow, not next week, probably not even in the next few months – but it will go away at some point in the near future.
The Ethereum network is upgrading to ETH 2.0 and is thus stopping mining and replacing it with Proof-of-Stake (PoS). There is even a risk that ETH 1.0 will go to the PoS before the full start of ETH 2.0. The miners’ more immediate concern is EIP1559, a proposal to improve Ethereum to address the fee structure and make ETH tighter.
What does this mean for mining in Ethereum?
On the positive side, there are many events ahead for miners to prepare for. However, the downside is that Ethereum miners are more or less guessing and waiting to see when these changes will affect them.
I am a miner from Ethereum.
In 2020 I built an Ethereum mining rig for less than $ 1,000. Good luck with that in 2021. With COVID, the Crypto Bull Market and FOMO, the final efforts have been made to dismantle ETH before the PoS kicks in. Start-up costs for mining have risen dramatically. It is difficult to find GPUs and other parts (at reasonable prices) that are needed for mining.
Due to the upcoming changes to Ethereum, I’ve also looked at other minable cryptocurrencies like Ravencoin. I am currently doing a special mining of Ravencoin and adding to my RVN holdings as it is one of the more profitable coins for me. I expect the price of RVN to go up at some point in the next year. Similar to Bitcoin, Ravencoin has built-in halving events and one is coming in January 2022.
A jump in price at Ravencoin is not a guarantee. I only mine it as a hedge in case it goes up. Alternatively, it is a coin that can be mined on my rig as soon as Ethereum is no longer minable.
Ethereum is very profitable to me at the time of writing. Despite the threat to miners exiting the pipeline, gas charges remain high, ETH has always hit high unit prices in recent weeks and The entire crypto market is hot. Even volatile price fluctuations at ETH tend to have a positive effect on miners. In a wild market, miners can benefit from this.
All of this is about to change. EIP1559 will be the first major test. We’ll know more about how the improvement proposal should really affect mining in Ethereum in June or July, and then we’ll have to wait and see what effect it will do once it’s implemented. At the moment, ETH is very profitable for me. Like other cryptocurrencies like Ravencoin.
If ETH is no longer profitable for me or can no longer be mined (sometimes much later), this not only means that other cryptos like RVN will automatically remain profitable.
It will be important to observe where all of the ETH hash power flows to once Ethereum is no longer profitable and ultimately no longer mineable at all.
Some of it sounds like doomsday talks.
It’s not that urgent, but it’s important to understand what’s happening in cryptocurrency mining right now, when A) Are you an existing miner or B) You are interested in getting into mining.
I mentioned the high startup costs in 2021.
COVID and the Crypto Bull market both contributed significantly to increasing demand for graphics cards, computer parts, ASIC miners, and pretty much anything you can do at home related to technology. That meant it was more difficult to get the parts you needed build a mining rig. I was lucky enough to get mine up and running just before the bull market. Now, however, it has been a challenge to improve my rig as parts are difficult to come by or extremely overpriced.
You can buy second hand parts on eBay or Craigslist. You can even get lucky in some big-store lotteries like Best Buy or Newegg. I added myself to the notifications list directly from companies like EVGA whose graphics cards I am currently using. When you buy second-hand GPUs or other parts, you’ll see prices two or even three to four times what they usually are. It’s hard to justify paying these prices.
The chip and parts shortage also means that if you’re in Group B (looking to get started in mining), Now is not a good time to start. You have high priced parts that are hard to come by and the prospect of Ethereum phasing out mining as we speak. Even if other cryptocurrencies naturally remain degradable, the ETH transition will have ripple effects. There’s also a chance the chip and parts market will reopen later in the year, especially if ETH miners ditch their GPUs and rigs when ETH becomes less profitable for mine. I also hope Nvidia and other chipmakers will catch up with demand as the world recovers from the pandemic.
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Take Ravencoin as an example. Many Ethereum miners simply say that once ETH becomes less profitable or no longer mineable, they will simply switch to Ravencoin. That’s probably what they can and will do, but that doesn’t mean Ravencoin will be as profitable as it is now.
If miners flood the network with a new coin like Ravencoin, there will be more hash power on that network and the difficulty will increase – making mining Ravencoin less profitable than we might expect.
It’s hard to say what these scenarios will actually look like until they happen. That’s one of the reasons I mined Ravencoin to switch to it later. By mining, I can now grow my RVN holdings, get familiar with the mining pool I am using, and see how my graphics cards are performing. Primarily, I’d like to expand my knowledge of the Ravencoin network in case I move most of the mining from Ethereum to Ravencoin later this year.
Let me put my approach to Ethereum and Crypto Mining in context. I am primarily a bitcoiner. I discovered Bitcoin In 2013 I bought my first BTC in 2015. However, I was thrilled. I found ETH earlier in 2016 and was lucky enough to buy ETH from $ 12. Bitcoin and Ethereum are responsible for the majority of my cryptocurrency holdings. You can even take a look at it my crypto portfolio As of May 2021.
I started mining Ethereum because I was much more at home due to the global pandemic and because I wanted a more tangible way to get involved in cryptocurrency than just investing.
I wrote about it I am building my Ethereum mining rig here and then followed with why I started mining in the first place. Check out both posts if you want to learn more about my journey through crypto mining. I also provide a full build parts list in my original post if you’re curious to learn more about what’s inside a rig.
It is important to note that while I own an ETH, the dominant holding in my crypto portfolio is BTC. As I said, I’m a bitcoiner first.
My goal is to increase my bitcoin stack. I will probably continue to hold ETH even if the Ethereum mining goes away at some point, but my ETH stack will continue to shrink compared to my BTC stack. One reason I’m mining my crypto is to increase my BTC stake. I don’t hold 100% of the ETH that I mean. I mean in a way that makes it easy to convert rewards into BTC – that means I mine right into a wallet that allows me to convert them.
This also means that if I shut down mining Ethereum for good, I will have the same approach to Ravencoin or any other crypto like Ethereum Classic. I can’t promise I’ll just mine and hold another coin. With Ravencoin, I’m slightly bullish on the road to halving in January 2022. I think there is a chance the price will go up the closer we get to that date, but nothing is definitive. Neither can I say that I will not convert at least some of my RVNs to BTC.
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The state of crypto mining in 2021 is developing rapidly. It’s a dynamic situation with lots of moving parts. Right now if you are already a miner it’s a great time for me. There’s nothing like keeping the profitability of your mining high AND the price of the coins your mining is increasing in tandem. New all-time highs for Ethereum have made things even better. The bitcoin and crypto bull market with theories of a Bitcoin Supercycle Getting tossed around brings more money and attention to cryptocurrency. But everything changes too.
Keep an eye on the upgrades on the Ethereum network. ETH 2.0 will redesign both Ethereum and the rest of the Crypto Mining Space. These changes, as well as developments in chip manufacturing, will change the landscape for new miners and for those who want to expand mining.
Let me know what you think about the status of the GPU and even ASIC mining right now. Are you a crypto miner? Are you interested in mining? If so, what are your strategies to secure parts and keep your up-front costs down? I am also happy to provide insights. Thanks for reading my post! If you want more content like this, sign up for my newsletter.