The impact of ETH upgrade on miners: transformation or exit?

Ethereum's upgrade from the Proof of Work (PoW) mechanism to the Proof of Stake (PoS) mechanism has had a huge impact on miners, forcing them to face the difficult choice of transformation or withdrawal. Transformation directions include turning to other PoW projects (such as Ethereum Classic or emerging project Zether), using existing mining equipment to transform data center business (providing high-performance computing services or participating in Web3 protocol computing), and participating in Ethereum PoS staking to become a validator. However, some miners finally chose to withdraw from the mining industry due to factors such as restrictions on mining machinery and equipment, difficulty in recovering their investment, and uncertainty in the market and regulatory environment.

ETH upgrade has had a significant impact on miners, and miners are facing the choice of transformation or exit. The specific analysis is as follows:

Transformation direction

• Turn to other PoW Project 1:
  • Mining Ethereum Classic and other similar coins: Ethereum Classic hash algorithm is compatible with Ethereum. After the merger of Ethereum, many miners turned to Ethereum Classic, causing their computing power to soar by 460%.
  • Looking for emerging PoW projects: Some emerging blockchain projects that adopt the PoW consensus mechanism provide new opportunities for miners, such as Zether ($ZTH). It adopts a PoW consensus mechanism compatible with Ethereum algorithm, and some classic Ethereum mining machines can participate in mining without hardware or software changes.
• Teach into data center business 1:
  • Provide high-performance computing services: Large mining companies such as Hut8 and Hive Blockchain choose to transform into the high-performance computing industry, use their original hardware equipment and infrastructure to provide services to enterprises or projects that require a large amount of computing resources, as an alternative to cloud computing giants.
  • Participate in Web3 protocol computing: Miners can contribute GPU computing power to Web3 protocols such as Rendernetwork, Livepeer and Akash, providing computing support for the operation and development of these protocols and obtain corresponding benefits.
• Participate in Ethereum PoS staking: After Ethereum is upgraded to PoS, miners can stake their holdings as validators. Just pledge 32 ETH to join the validator team and participate in the creation and verification of new blocks, thereby obtaining an ETH reward of 1.

Opdate Exit

• Restrictions on mining equipment: For miners using ASIC mining machines, the equipment is highly customized and difficult to continue to use in other projects. The second-hand market value is low. The cost of continuing to mine after the Ethereum upgrade is too high, so you may choose to exit.
• Difficult to recover money: If miners invest a lot of money to purchase mining machines, build mining farms, etc. before Ethereum upgrades, but have not yet recovered money, and they are expected to be unable to recover costs through mining in the remaining time, they may choose to stop losses in time, sell mining machines and related equipment, and exit the mining industry1.
• Market and regulatory environment: There is great uncertainty and volatility in the cryptocurrency market, and coupled with the changing regulatory policies of various countries on cryptocurrencies, some miners may choose to withdraw after Ethereum upgrades after upgrading and turn to other more stable investment areas.

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