Noti Hash: Ethereum mining faced with a dilemma due to Merge and Bitcoin miners resist

Bitcoin mining difficulty chart

Key facts:
  • The growth of the Bitcoin hashrate evidences a greater participation of miners.

  • They discover a flaw in the most recent update of Ethereum, before the Merge.

Noti Hash is CriptoNoticias’ Bitcoin mining newsletter. It is published on our website every two weeks, being today, Thursday, September 8, 2022, the 28th edition to be published, at block 753,181.

Bitcoin and Ethereum, the two most important networks in the ecosystem, experienced important events these two weeks that directly affect cryptocurrency miners. Let’s first see what happened in Bitcoin.

During the last Bitcoin mining difficulty setting, the network saw an increase in miner participation. This translated into an increase of more than 9% in this parameter that allows regulating the issuance of new coins.making mining harder or easier according to the number of miners competing for the reward.

As we reported in CriptoNoticias, this increase in difficulty may be a consequence of the reactivation of equipment in mining farms. For the past two months, large Bitcoin miners have been forced to shut down their equipment due to a heat wave.

With the increase in the price of bitcoin (BTC) during the second half of August and the scheduled delivery of new models of ASIC equipment (specialized in mining), there is a formula for this increase in competition for mining Bitcoin.

However, at the beginning of the second week of September, the abrupt fall in the price of bitcoin influenced a decrease in the profits of the miners, which was evidenced in the reduction of the hashprice less than 0.08 USD/TH/day. This fact does not seem to have affected their participation in the activity.

Bitcoin mining difficulty chart
The increase in the difficulty of mining Bitcoin is the largest so far this year. Source: Brains.

At the same time that the competition for the reward of mining Bitcoin grows, a fact occurs that contrasts with that reality. A lone miner beat out the big mining pools in the race to find a transaction block. It only had 270 TH/S of capacity.

Bitcoin miners in Argentina

Two apparently conflicting facts stand out in the panorama of Bitcoin mining in Argentina.

On the one hand, one of the main mining companies announced that in September they will begin to build the infrastructure of a mining mega-farm that will have an initial power of 50 MW. Enough power to connect 10,000 Antminer S19 Pro Hydro, capable of contributing 2.5 EH/s to the network.

At the other extreme, the fact that the Federal Public Revenue Administration (AFIP) shut down a Bitcoin mining farm in San Juan province (operating inside an industrial refrigerator).

AFIP officials in bitcoin farm
Image of the police operation in San Juan. Source: AFIP.

The importation of the ASIC equipment used in said farm was carried out without the corresponding permit and payment of customs duties. Bitcoin mining in Argentina is not illegal and in fact the country has the ideal conditions for the activity.

Ethereum is one week away from the Merge, which would eliminate mining

The main concern of Ethereum miners remains what to do after the merge. This network protocol update will ditch mining with graphics cards or ASICs in exchange for a system based on the participation of funds.

In other words, the reward is obtained by investing cryptocurrencies and not hashrate or computing power with machines. You can see the 3 things that will change in Ethereum after the Merge in this article that CriptoNoticias did.

By the way, the mining pools prepare. Some have set their position regarding the possible hard fork of Ethereum before the Merge. Other mining pools indicate the steps that miners must follow in this scenario.

Specific, Ethereum miners have three alternatives. The first may be to fork the network before the merge. That is, to make a copy of the network, to use the history of the transactions and the rules of the protocol as they are at this moment.

The other option is to migrate to a network that uses proof of work, such as Ethereum Classic. In fact, many miners have already started to migrate to this network, which has caused a drop in the profitability of this activity on this network. The reason is that the increased competition for the reward comes at a time when the price of the coin is in the red.

The other alternative that Ethereum miners have is to sell their graphics cards (GPU). In this sense, Huang Jenxun, CEO of Nvidia, one of the main manufacturers of video cards, called on the vendors of these equipment to “bear” the price drop.

The pressure to lower the price of this equipment may be driven by an oversupply. In part, as a consequence of the possible sale of GPUs from Ethereum miners. In fact, the manager had announced weeks ago the excess inventory of these components. Another reason that contributes to the fall in their prices.

In any case, we have to wait for the result of the update, because this week a block validation failure was detected after the activation of Bellatrix.

Green mining in Bitcoin

Bitcoin mining continues to give evidence of how this activity can contribute to improve practices on energy consumption. In this regard, an environmental law in the United States gives shelter to this industry.

A researcher conducted a report to determine how much energy from negative carbon sources is needed to make Bitcoin neutral by 2024. In his report, researcher Daniel Batten suggested that one of the sources to obtain this amount of energy can come from garbage dumps.

On the other hand, Arcane Research made a report describing the main 4 benefits of Bitcoin mining for the electricity industry. Highlights the strengthening infrastructure and harnessing renewable energywhich is also crucial for the environment.

Featured Image of the Week

The photo of the week portrays a group of mining equipment from a medium-scale operation carried out by Giga Energy in Houston, United States. The increase in Bitcoin’s hashrate in recent days is influenced by activities like this from computers recently connected to the network.

Bitcoin Mining in Houston
A medium-scale Bitcoin mining operation in Houston, with newly networked equipment. Font: Matt Lohstroh/Twitter.

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