Ethereum’s hash rate hit a new ATH

22 February 18:13

[TL;DR]

Did you know that just over a month ago, Ethereum's hash rate hit a new all-time high of 1.11 petahash/second which corresponds to 1,110 trillion hashes/second? Mindblowing right? It reflects that the number of nodes in the network has increased; in much simpler terms, the amount of mining power for Ethereum increased.

Over the years, Ethereum mining was due to transition from Proof-of-Work mechanism to Proof-of-Stake; it was due to clamor raised over the amount of energy used in proof-of-work mining. Ethereum mining consumes so much energy that its annual energy consumption equivalent is the nation of Austria. However, Bitcoin mining consumes twice as much power.

Ethereum 2.0 blockchain was meant to kickstart using the Proof-of-Stake mechanism. However, network participants put a hold on this by implementing Muir Glacier in January 2020 which set back the transition by several months. In December 2021. they implemented the Arrow Glacier Upgrade pushing the transition timeline more forward. The Arrow Glacier upgrade changes the parameters of the Ice Age/Difficulty Bomb to delay the bomb on the mainnet.

Twenty days after the implementation of the upgrade, the Ethereum mining hash rate crossed the 1 PH/s mark indicating the increased computational power on the mainnet. The rise in mining hash rate is a win for the miners as it means more money to their pockets. In this post, we will review some of the reasons for the happening and its impact on the price of Ethereum.

Source: Etherscan.io

How Much Hashrate is Needed to Mine 1 ETH?

Considering the amount of energy consumed in mining Ethereum and the amount of mining power required, it is worthy of consideration how much hash rate is needed to mine one Ethereum. The hash rate is a calculation of how many solutions your mining rig can make every second. The factors looked at in determining the speed of mining 1 ETH are the hash rate of your mining rig and the difficulty level.

Ideally, it takes 15 seconds to completely verify a block of transactions on the Ethereum blockchain and the reward for completing a block of transactions is 2 ETH. However, if mining Ethereum was this easy, it would be a super profitable venture. At the time of writing this article, the mining difficulty according to CoinWarz was at 12.44 P and, block height was at 14,138,042. This incredibly high difficulty level means it takes a far longer period for a block of transactions to be completed before a new block starts.

Difficulty Level: It describes how many hashes (solutions) must be generated to solve a block of transactions before earning the reward for the block.

According to CoinWarz, at the current difficulty level, it would take a 750 MH/s mining rig 96 days to mine 1 ETH. It would take a 20 GH/s mining day approximately 3.6 days to mine 1 ETH. To help miners, Innosilicon has crafted a new ASIC mining rig with a hash rate of 1.5 GH/s, a significant improvement from the 750 MH/s devices available.

One significant problem miners also face in Ethereum mining is profitability. With the regular Innosilicon A10 Pro 750 MH/s mining rig, miners make less than $30 daily with electricity costs of $3.24, they would require 2 years of consistent mining to break even.

Nowadays, Ethereum miners do not set out on a solo journey, it is more profitable to earn from belonging to a mining pool. In mining pools, the miners pool their mining power together and share the rewards earned based on the amount of mining power each person brings to the table. For example, it would a single miner approximately 50 days to mine 1 ETH using a 1.5 GH/s Innosilicon ASIC miner. It would take 18 miners using the 1.5 GH/s approximately 3 days to earn 1 ETH (All calculations derived from CoinWarz). Over an extended period, miners make more from the mining pool than from solo efforts.

Ethereum Hashrate vs Price

Does Hashrate affect Price? This question has been a constant topic in blockchain discourses, not just for Ethereum, but also for Bitcoin. Hashrate is a factor in Proof-of-Work mining, hence the question pops up in discussions regarding Bitcoin and Ethereum.

Some experts have hypothesized that the hash rate does not affect the price rather the price affects the hash rate. The major proposition in favor of this argument is that as prices increase, the block rewards become enticing to miners which causes them to purchase new and more efficient machines. Other individuals like Max Keiser, the media personality argue that the hash rate affects the price.

In an article in the Journal of Risk and Financial Management, Dean Fantazinni and Nikita Kolodin tried to observe the relationship between bitcoin price and its hash rate. The research work showed that there was some form of relationship between Bitcoin's hash rate and Bitcoin's price. According to the article, wherever the price went, the hash rate followed but there were lags in the directional movement of their charts which were hinged on factors like oil and gas prices.

Little has been said about the relationship between Ethereum mining hash rate and price. Considering that both Ethereum and Bitcoin use the proof-of-work mechanism, not much difference is expected in the dynamics between Ethereum and Bitcoin. Based on information available from credible sources, I hypothesize that the Ethereum hash rate will follow the dynamics of the price with certain lags in the movement of the chart.

Ethereum Mining Pool

Some classic examples of Ethereum mining pools are;

- Ethermine
With a mining hash rate of 303.3 TH/s and 395972 active miners, they are the undisputed champions of Ethereum mining. Ethermine also mines Ethereum Classic (ETC).
- 2Miners Pool
This is another Ethereum mining pool, with a hash rate of 40.04 TH/s and 86311 miners.
- Nanopool
They have a current mining hash rate of 24.892 TH/s and have 44,171 miners.
- Hiveon
They have a pooling hash rate of 106.3 TH/s and 131,037 active miners.

There is also F2Pool that has about 15% of the total hash rate of the Ethereum network. Other mining pools include Ethpool with a hash rate of 4.1 GH/s and 62 miners, Ezil has a hash rate of 13.7 TH/s and 17,398 active miners. Some Ethereum mining pools worthy of mention include btc.com, Antpool, MiningPoolHub, etc.

Author: Gate.io Observer: M. Olatunji
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