The crypto community is looking forward to the launch of the second version of the Ethereum protocol - Eth 2.0.
At the moment, new Ethereum tokens on the network are mined using Proof-of-Work mining, using high-powered equipment (mainly ASIC miners or GPU farms).
Ethereum mining after the launch of Eth 2.0 will be very different.
With the introduction of the Proof-of-Stake algorithm, the need for energy-intensive equipment, which is now used to solve algorithmic problems, will disappear entirely.
Currently, consensus on the Ethereum network is achieved using Proof-of-Work, similar to Bitcoin.
In fact, the process is identical to BTC mining, where miners use computing resources to receive a reward for each block added to the blockchain.
However, there is a difference.
BTC mining is now possible exclusively on ASICs, massive, expensive, and energy-intensive equipment, the use of which is justified only in regions with cheap electricity.
As for Eth Hash (Ethereum hashing algorithm), it is designed to work optimally on Nvidia, AMD GPUs.
However, the network is not completely secure from ASIC mining. Since 2018, integrated circuits have been regularly released specifically for ETH mining. This led to the fact that a significant part of GPU owners suffered from a decrease in profits, some even switched to mining other crypto assets.
There was also dissatisfaction with the fact that the white paper contained a statement about the resistance of ETH to ASICs.
At the moment, both ASICs and GPUs are used in the network. GPUs are more convenient because of their flexibility and the ability to switch to other algorithms at those moments when they can give a more significant profit. However, in order to compete with ASICs, it is required to assemble a so-called “mining farm” of considerable power.
Developers are faced with the challenge of changing the network consensus protocol from Proof of Work (PoW) to Proof of Stake (PoS).
As a result, the network will require much less electricity, and will also become more scalable and faster. The security of Ethereum 2.0 will be supported by validators who have staked their tokens. Due to its own financial risks, it would be unprofitable for the validator to harm the network.
When the current PoW chain merges with the Beacon Chain (the already running PoS chain) - this transition will mark the full launch of Ethereum 2.0.
This could happen before the end of 2023.
Ethereum developer Tim Beiko advises miners to gradually complete the process now. Experts are considering gradual exit strategies, with the transition to cryptocurrencies such as Ethereum Classic or Ravencoin.
Ethereum miners have already undergone significant changes.
In early August, the London “hard fork” took place – the most significant change since the creation of Ethereum in 2015, according to Vitalik Buterin.
ETH transaction fees will no longer go to miners, but will instead be sent to an address that no one can access. This is called incineration.
Miners now only receive new-minted ETH as a reward.
The benefit of EIP-1559 is that reducing supply will increase demand (and hence the value of the ETH asset).
But the main goal is to gradually lead people to abandon mining. If some people leave now, then the difficulty will decrease, and the remaining miners will be able to earn more. Until the network merges, at least a few miners are needed, but if their number gradually decreases, this will not harm security.
The update addresses three issues - insufficient transaction scalability, reduced resiliency, and too high disk space requirements.
The Proof-of-Stake algorithm removes the competitive element, miners will no longer need to compete in solving algorithmic problems. Scalability problems will be solved by chain sharding, adding more nodes to the blockchain, and load balancing.
So, from now on we’re gonna introduce you to Ethereum 2.0 mining. You can become a validator now, though in order to get paid you’ll have to wait till the merge will be completed.
Although staking involves less energy than mining, there are certain requirements for validator hardware.
Ethereum 2.0 validator staking process:
It is advisable to store them in a hardware wallet for proper security.
Go to the official Ethereum website in the section launchpad.ethereum.org.
Click "Become a validator".
Read the manual carefully. This is very important so that later there are no questions and unexpected problems arising.
A detailed comparison is here: ethereum.org
We’d recommend using Lighthouse. This is a client developed by Sigma Prime, an information security and software company, funded by the Ethereum Foundation and Consensys.
Although you’re free to try any other options as well.
You will need to generate a deposit key, a mnemonic phrase, a validator file.
With the help of mining - solving algorithmic problems on specialized equipment.
It will probably stop being in high demand.
Approximately in 2023, but the dates can be rescheduled because the process of transition is not an easy task.
32ETH. But you can invest less if you join the pool of validators.
The network will be supported by staking (hence, “Proof-Of-Stake” consensus).
Again, Validators are people who stake ETH and are responsible for confirming transactions.
From a financial and economic point of view, this is similar to investing: investing money and gradually paying off the investment.
Ethereum mining will change dramatically after the launch of Ethereum 2.0, which will benefit ordinary ETH users the same as miners themselves.
The main Ethereum network that is in use today is expected to be added as a fragment on Eth2 in phase 1.5.
The new network will be fully interoperable with the Ethereum ecosystem, and the tokens of the first network can be burned and replaced with tokens of the second network interchangeably.
Applications and users will not be directly affected until they manually switch the network in their software. There should be no shortage of Ethereum block validators: the number of Ethereum wallet addresses that contain 32 ETH or more is measured in literally, tens of thousands.
