The stretching aftermath of China’s crackdown on crypto mining has triggered a hashrate reduction on the Ethereum network. This occurrence victimizes ETH as a reasonable amount of it is mined within the prohibited jurisdictions. The hashrate of the network has fallen by 25 percent today from May.
Glassnode confirms that the hashrate decline is the worst Ethereum ever encountered. The network which hosts a wide array of Dapps on its blockchain attained an earlier ATH on May 20th to 585.5 TH/s (terahashes per second). However, the exponential stride was short-lived as it plummeted 40 days after.
Ethereum’s mining hashrate similarly declined by 57 percent during the crypto winter in 2018, but just like every other sort of decline, it rose again.
Furthermore, hydroelectric generators in China, especially Sichuan, are going cheap as a result of the miner migrations. Residents are putting up these generators for cheap sale on local e-commerce sites. Essentially, the demand for a less costly power supply in the region is gradually fading out.
Miners to Say Farewell as Ethereum Gears to Migrate to a POS Consensus
Similar to Bitcoin, Ethereum is mined on a proof-of-work consensus. The primary difference between the two is that while Bitcoin mining is operated by ASIC miners, Eth’s is GPU miners.
Soon enough, Ether would be migrating to a proof-of-stake consensus which would eliminate the need for miners. The reason for this upgrade is for the second largest crypto asset by market cap to offer more scalability as an efficient network. Miners would have to sell off their mining equipment or use the GPUs to mine other ETH-based altcoins.
Staking on the network will also be profitable, however, it’s speculated that not all miners would opt for it. The ETH 2.0 migration has been delayed for a while now; this is understandable as Ethereum is a huge network making a historic shift. Vitalik Buterin, Ethereum’s co-founder said last August that the migration appears harder than expected.