Written by Dalmas Ngetich
Crypto prices are going through the roof, with Ethereum as one of the brightest lights. Ethereum’s success is not only its robust network of dApps and users but also its soaring valuation.
Year-to-date, ETH prices have more than 6.5X.
At press time, prices were pushing $1.9k, which is record-high territory. Earlier in January, ETH bulls eased past the coin’s previous all-time high of $1.4k posted during the ICO hype of late 2017 and early 2018.
The difference between now and previous rallies is that participation is exponentially higher. The blockchain has matured and the system has more optimists expecting prices to soar even higher. However, in all this rush, some of the top beneficiaries, technically earning passive income, are Ethereum miners.
The Ethereum Incentive
We must remember that Ethereum is still being glued by a web of globally distributed miners. The network operates from a Proof-of-Work consensus algorithm base layer. They play the crucial role of ensuring security through decentralization and validating transactions.
As they contribute computing resources, they also receive compensation in ETH and transaction fees. Every transaction posted in Ethereum now costs an eye-popping $19. It was less than $5 a few months ago. Additionally, for every block mined, miners receive 2 ETH (but fluctuates). This incentive, thanks to rising ETH prices and increasing network activity, is a gold mine.
The Gold Mine
To illustrate just how lucrative Ethereum mining has been, in Q4 2020, miners, benefiting immensely from the explosive popularity of DeFi, earned more from transaction fees than block rewards.
In the first three quarters of 2020, Ethereum miner revenue nearly tripled, surpassing those made by Bitcoin miners. In May 2020, Bitcoin had halved its mining block rewards to 6.25 BTC. However, the presence of smart contracting and rising DeFi pushed Ethereum trading volumes to over $24 billion.
Also, between August and September, and due to the resulting congestion, miners’ revenue averaged $305 million.
In January 2021—and riding on rising ETH prices, Ethereum miners scooped $800 million, surpassing those earned during the climactic ICO-induced rally of late 2017.
Out of this, 41 percent—or around $311 million, was generated straight from transaction fees. At the same time, miners are pulling more revenue per MH/s, levels last seen in early 2018.
Why Not Mine with Laptops?
The millions on the table are simply too good to pass, especially when users can plug in straight from their laptops. And this is exactly what Chinese miners have been doing: Bulk buying the latest version of NVIDIA graphic cards and fitting them in their laptops.
Reports from China point to the high level of demand. They are willing to risk it all, purchasing them even with limited or no warranty at all. Demand is at unprecedented levels that NVIDIA's Add-in Board (AIBs) partners are selling these boards directly to miners who are said to be paying generously.
Consequently, laptops fitted with the latest RT-30 series Nvidia graphic cards are most likely to be scarce and, if available, relatively expensive. As they scramble for what’s available, miners are stacking them on shelves and channeling hash rate to their mining pools.
Laptop Miners in Ethereum are Profitable
With rising prices, it is a no-brainer why this is the case. Trackers show that even graphic cards released in 2015 used to mine ETH are in green.
According to What-To-Mine, a single NVIDIA GeForce GTX 1060 6GB released in October 2016 generates $2.97 every day at spot rates while consuming just 90W to channel 22.5 MH/s of hash rate.
On the other hand, the NVIDIA GeForce RTX 3090 released in September 2020 produces 110 MH/s in hash power while consuming 300W for a net profit of $13.17. Each NVIDIA GeForce RTX 3090 ships for $1.5k, superior in the sense that it is based on Nvidia's Ampere GPU architecture.
The NVIDIA GeForce GTX 1060 6GB of September 2016 goes for $300. Problem is, with Ethereum’s resistance to ASIC miners, supporting GPU mining for complete decentralization, they are unavailable. This may persist as long as ETH prices continue to rise.
The unprecedented level of demand and use of Nvidia chipsets for mining ETH is a headache for gamers but presents another opportunity for the semiconductor manufacturer.
Nvidia Intervention: Chipset for Ethereum Miners
Last week, Nvidia said it would release a new series of semiconductors to mine ETH coins, abating the shortage of graphic cards in the market especially for gamers yearning for superior rendering.
These Cryptocurrency Mining Processors (CMP) will go on sale in early March 2021. They are also modifying the RTX 3060 chipsets so that they won’t mine ETH effectively once released at an unspecified date this year.
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This post is published for Cryptowriter in association with Voice.