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In recent months, since Bitcoin (BTC) allegedly fell through its alleged cost of balancing mining not once, not twice, but three times, the economy of Proof of Work (PoW) has been questioned by skeptical wary. For example, in an editorial article that became a hot topic in the industry in minutes, a MarketWatch contributor claimed that BTC, with its hashry drought and all nine meters, was ready to enter a deadly spiral. The piece, praised as heresy by many passionate crypts, has since been unmasked, and, of course, the flower at the edge of this market has not crumbled.
Yet, many still like to joke about cryptocurrency mining. And recently, a number of industry analysts have set their goals on Ethereum (ETH) and its transaction processing scene. So, after BTC has been put on show, it seems that it is now Ethereum's turn.
The mining of Ethereum remains profitable [For Some]
As reported by NewsBTC in mid-November, CNBC, citing data collected by Susquehanna, a crypto-friendly quantitative trading group, said that small-scale mining operations are all but feasible. The Pennsylvania-based company explained that the miner of the Ether graphics card saw its monthly profits fall to zero, down from the $ 150 seen in May 2017. Christopher Rolland of Susquehanna explained that even with the flagship processor of Nvidia (GPU), the GTX 1080, the return on investment (ROI) provided was depressing.
As such, it would be logical to suppose that with the current profitability trajectories, many miners, even those trying to accumulate ETH, can begin to completely give up the block processing.
Yet, in a piece published by DeCrypt Media, Tim Copeland, has denied the data of Susquehanna, claiming that "the miners of Ethereum are still strong". The journalist of the Deutsche Peter Statsenko told Tim that the price of electricity needed for Ether's mining is about $ 0.15 per KWH. And, with the kilowatt-hour rates that remain well below this figure in a number of countries, namely the Venezuela, China and Canada power plants, there are probably many miners who continue to hold their plants drilling connected, letting them spend the night.
It is important to note, however, that in a majority of countries where low-cost electricity is scarce, mining can be all but economically viable. According to OVOEnergy, Japan's average electricity rate exceeded $ 0.26 per KWH – well beyond the alleged level that would facilitate miners. And, interestingly, the hashrate statistics of the Ethereum network reflected the bombardment of some retail miners, with a decrease of 33% since BTC started its last lowest stage on November 14th.
Related reading: Cryptocurrency Mining Hardware Maker turns 1,000 pounds into over £ 1 million in the first year
Yet, Constantinople can launch crypto miners for a cycle
Prospects may already seem overly dismal for the backbone of Ethereum – miners – but commentators and analysts have emphasized that the assault is not over yet. In a recent tweet sequence that analyzes this topic from the top, Alex Kruger, a cryptic market analyst, explained that the miners left standing are not clear. According to Kruger's analysis, if miners currently pay $ 0.06 for KWH they have a "ETH mining operating balance" exercise [of] $ 67, "currently $ 35 (-35%) below the current value of Ether.
1 / $ ETH the operating balance in the mining sector, which pays $ 0.06 $ / kWh for electricity, is currently around $ 67 (estimates depend on operating costs other than electricity). For those who buy second-hand RX580 GPUs and devalue them in 1 year, the draw after amortization is $ 165
– Alex Krüger 🇦🇷 (@Crypto_Macro) December 18, 2018
Many have apparently continued to have a hash above this level, but Ethereum's break-even is scheduled for a steep hike in just three weeks, which could mean a disaster for this relevant subgroup of crypts.
For those who missed the memo, Ethereum, very similar to Bitcoin, Stellar and other noteworthy projects, has long embarked on a path to scalability and protocol improvement. The next step in the development of Ethereum is Constantinople, the most decisive upgrade of the blockchain in over a year. The hard fork, which moves the so-called "world computer" one step closer to its Serenity phase (Ethereum 2.0) is set to go down on January 16th.
Although Constantinople's fork is mainly based on updates that enhance the functionality of Ethereum and its ability to switch to a Proof of Stake (PoS) model, when the upgrade is active, the blocking premiums will drop from three ETHs to a block with two. As illustrated in the chart below by Eric Conner, zealous supporter of Ethereum, the update will cut the rate of inflation from ~ 6.8% to ~ 4.25%, dubbed "a huge step towards emissions from network close to 0% " [with] PoS "by Conner.
The "Third" of Ethereum, in which the block awards will be cut from 3 to 2, is located 181,580 blocks away. According to my estimates, it will take place on January 14 (PST).
This will be a huge step forward towards the emission of networks close to 0% in Pole testing. pic.twitter.com/1PT0FZqhqT
– Eric Conner (@econoar) December 16, 2018
Ethereum's long-term believers may be in the seventh heaven on reducing inflation, but miners will hear the crunch when the upgrade is activated. Kruger, citing his aforementioned analysis and the mathematics of napkins, explained that the tie at $ 0.06 for KWH will rise to $ 101, "sending other marginal miners out of the market" – a short-term bearish event in his eyes. Yet when it comes down, this is at the moment logical guestimations to the fullest. So for now, the miners of Ethereum will have to sit down with their hands and wait for the coming of Constantinople approaching quickly.
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