Core Scientific, one of the largest cryptocurrency miners in the United States, announced Wednesday it plans to list on the Nasdaq exchange in a deal that values the four-year-old company at $4.3 billion—the latest sign the nation's growing prominence as a bitcoin mining hub should only rise as longtime market leader China continues cracking down on the space.

As part of the deal, which is still subject to shareholder approval, Core will merge into special-purpose acquisition company Power & Digital Infrastructure (XPDI) and receive about $345 million to invest in additional equipment and infrastructure.

The Washington-based company, which also sells blockchain hosting and hardware, revealed it expects total revenue of $493 million and adjusted earnings of $203 million this year, followed by revenues of $1.1 billion and earnings of nearly $600 million in 2022.

Core mined 1,683 bitcoins, currently worth about $53 million, in the first half of the year out of facilities in Georgia, Kentucky and North Carolina; a fourth warehouse is under construction in North Dakota.

Existing shareholders are expected to retain all their existing equity, totaling about 89%, in the combined company.

Earlier Wednesday, Argo Blockchain, another cryptocurrency miner that already trades on the London Stock Exchange, also announced plans to begin trading in the U.S., saying it's filed a confidential prospectus with the Securities and Exchange Commission for a proposed listing.

The U.S. has quickly become the second-biggest bitcoin mining hub in the world. According to Cambridge University data, nearly 17% of all bitcoin mining in the world happens in the U.S., about three times more than its share just one year ago. Meanwhile, China's share has plummeted to 45% from as high as 80%. That figure's only expected to fall as more provinces announce sweeping plans to ban crypto mining to curb environmental risks. Last week, China’s Anhui province became the latest region blocking the practice to help ease expected power shortages.    

“For the last 18 months, we’ve had a serious growth of mining infrastructure in the U.S.,” Darin Feinstein, the founder of Core Scientific, told CNBC last week. “We’ve noticed a massive uptick in mining operations looking to relocate to North America, mostly in the U.S.”

Billionaire Michael Saylor, the longtime executive of data analytics company MicroStrategy, praised the Core and Argo listings in tweets Wednesday, saying publicly traded bitcoin miners will bring "financial capital, engineered facilities and credibility" to the global cryptocurrency network and "enhance bitcoin as an institutional asset." MicroStrategy owns about 92,079 bitcoins worth more than $3.2 billion as of Wednesday, making it the corporation with the biggest bitcoin investment in the world.

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I'm a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism

I'm a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC's Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com. And follow me on Twitter @Jon_Ponciano

When crypto investors discuss quantum computing, they invariably worry about its potential to undermine encryption. Quantum computers alone do not pose such a mortal threat, however. It’s their capacity to exploit Shor’s algorithm that makes them formidable.

That’s because Shor’s algorithm can factor large prime numbers, the security behind asymmetric encryption.

Another quantum algorithm can potentially undermine the blockchain as well. Grover’s algorithm helps facilitate quantum search capabilities, enabling users to quickly find values among billions of unstructured data points at once.

Unlike Shor’s algorithm, Grover’s algorithm is more of a threat to cryptographic hashing than encryption. When cryptographic hashes are compromised, both blockchain integrity and block mining suffer.

Collision Attacks

One-way hash functions help to make a blockchain cryptographically secure. Classical computers cannot easily reverse-engineer them. They would have to find the correct arbitrary input that maps to a specific hash value.

Using Grover’s algorithm, a quantum attacker could hypothetically find two inputs that produce the same hash value. This phenomenon is known as a hash collision.

By solving this search, a blockchain attacker could serendipitously replace a valid block with a falsified one. That’s because, in a Proof-of-Work system, the current block’s hash can verify the authenticity of all past blocks.

This kind of attack remains a distant threat, however. Indeed, achieving a cryptographic collision is far more challenging than breaking asymmetric encryption.

Mining Threats

A somewhat easier attack to pull off using Grover’s algorithm involves proof-of-work mining.

Using Grover’s search algorithm, a quantum miner can mine at a much faster rate than a traditional miner. This miner could generate as much Proof-of-Work as the rest of the network combined. Consequently, the attacker could effectively take over the blockchain and force consensus on any block they selected.

A quantum miner might also use Grover’s search algorithm to help facilitate the guessing of a nonce. The nonce is the number that blockchain miners are solving for, in order to receive cryptocurrency. That’s because Grover’s algorithm provides a quadratic speedup over a classical computer (for now, ASIC-based mining remains considerably faster).

How fast is a quadratic speedup? Roughly stated, if a classical computer can solve a complex problem in the time of T, Grover’s algorithm will be able to solve the problem in the square root of T (√T).

Thus, any miner who can solve the nonce faster than other miners will be able to mine the blockchain faster as well.

Grover’s algorithm could also be used to speed up the generation of nonces. This capability would allow an attacker to quickly reconstruct the chain from a previously modified block (and faster than the true chain), .In the end, a savvy attacker could substitute this reconstructed chain for the true chain.

Grover’s algorithm may ultimately help make Proof-of-Work obsolete. That’s because “there is no possible PoW system that is not susceptible to Grover speed-up.” In the end, “quantum actors will always have an advantage over classical ones in PoW-based blockchains. (allowing them) to either mine more effectively or (instigate) an attack” (source).

Proof-of-Work Weaknesses

As bitcoin matures, the weaknesses inherent within PoW become ever-more evident. Miners are pitted against each other as if in a never-ending arms race This arms race is incentivized by the ability of larger mining pools to achieve economies of scale, a cost advantage that quickly erodes the capacity of individual miners to survive.

Of course, Proof-of-Stake is not without flaws. For instance, critics assert that it favors larger stakeholders (hence the claim that it enables the rich to get richer). These critics neglect to note that PoW is amenable to the same strategy (albeit with miners).

As this arms race comes to a head, any miner with the resources to do so will use quantum computing to achieve a competitive advantage. Combined with Grover’s algorithm, a quantum-based miner would outperform other miners (most likely, small-and medium-sized miners). .

With access to quadratic speedup, any PoW coin will inevitably fall under the control of mega-cap institutions and governments. If so, regular investors and mid to large-cap enterprises risk getting priced out of the market. In particular, their devices will be either too expensive or prone to excessive regulation (much the same way that PGP encryption once was).

Shor’s algorithm undoubtedly poses the most immediate threat to bitcoin (namely, the potential to break ECDSA, its digital signature algorithm). Grover’s algorithm is a distant second in this respect.

Grover’s algorithm may someday pose a formidable challenge to PoW mining, however. And it could conceivably threaten cryptographic hashing as well. Any algorithm powerful enough to reverse engineer hash values would invariably undermine PoW itself.

Quantum Resistant Ledger (QRL) will ultimately offer protection against both.

For instance, a quantum-safe digital signature scheme named XMSS safeguards the coin from Shor’s algorithm.

Likewise, the QRL team will rely on Proof-of-Stake to head off mining-based attacks using Grover’s search algorithm.

As you can see, the QRL team is thoroughly preparing for a post-quantum future. Their mission is an increasingly urgent one, as quantum computing continues to advance by leaps and bounds.

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As Ethereum celebrates its sixth anniversary, Joe Lubin, a co-founder of Ethereum and the CEO of ConsenSys, says the convergence between the public mainnet and corporate versions of the technology are now closer than ever.

Lubin, who is speaking today at the Enterprise Ethereum Alliance (EEA) anniversary event alongside Ethereum chief scientist Vitalik Buterin and Web 3.0 leader and angel investor Balaji Srinivasan, pointed to cryptocurrencies, decentralized finance (DeFi) and non-fungible tokens (NFTs) now entering pop culture.

“In my opinion, this is a moment where we can start to think of the paradigm shift towards a new trust foundation,” Lubin told CoinDesk in an interview. “We’ve been proclaiming for years that it’s coming, and now it’s moving fast.”

Related: A Play-to-Earn Account Beats a Bank Account

Lubin’s ConsenSys has become a cornerstone of enterprise blockchain, having taken on stewardship of the permissioned Quorum network, a fork of Ethereum created by mega-bank JPMorgan in 2016.

In terms of the convergence narrative, Lubin said banks like JPMorgan and Goldman Sachs are “not just paying a lot of attention to the public mainnet, but are starting to do things around digital assets.”

That said, the EEA now finds itself in increasingly active discussion about just what “enterprise blockchain” is in 2021, Lubin said. 

“So, in the context of the EAA, is Polygon an enterprise?” Lubin said. “Is the Maker Foundation an enterprise? The definition of ‘enterprise’ is evolving.”

Related: Market Wrap: Bitcoin Stalls Near $40K as Buyers Take Profits

EEA Chairman John Whelan said he looks forward to Ethereum sidechains and layer 2 systems that are specifically enterprise-related. 

Whelan, whose day job is leading Banco Santander’s blockchain lab, said that when he first joined the EEA, he was asked if enterprise Ethereum and the public mainnet would remain separate concepts. 

“The answer is no,” he said.

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Bitcoin crossed the $40,000 plateu late Tuesday night, before a slight pullback.

Early Wednesday morning Bitcoin was up more than 6%.

The price was around $39,7500 per coin, while rivals Ethereum and Dogecoin were trading around $2,300 and 20 cents per coin, respectively, according to Coindesk.

Bitcoin’s mining difficulty may be set to increase for the first time since China’s crackdown on crypto mining in May, according to Coindesk.

MAYOR SUAREZ ON MIAMICOIN LAUNCH, SAYS CITY IS FOCUSED ON ‘DIFFERENTIATING OUR ECONOMY’

Being blamed are the rapid expansion of mining facilities in North America and the return of Chinese miners through overseas hosting sites.

Mining difficulty is a metric to describe how hard it is to mine a block and get rewards in bitcoin.

An increase in mining difficulty requires a miner to use more computing power to earn bitcoin, which reduces the miner’s profit margin. 

Miami Mayor Francis Suarez discussed MiamiCoin, the city’s newest cryptocurrency initiative, during an appearance on "Varney & Co." on Tuesday. The mayor says the city is focused on ‘differentiating its economy’ by ‘creating the new wave of technological products.’

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Suarez calls Miami the bitcoin capital of the world.

"The City of Miami could end up earning millions of dollars as a result of the popularity of MiamiCoin," Suarez said. "We're focusing on differentiating our economy by creating the new wave of technological products that will incentivize people to move to Miami and be part of our tech ecosystem".

Whenever a MiamiCoin is mined, a percentage of the coin by virtue of the programing goes to the City of Miami. 

Miami hosted the 2021 Bitcoin conference last month.

The new frontier of miner/maximal extractable value (MEV) on Ethereum may have negative consequences for network finality and immutability. Key to defending Ethereum against these MEV forces is the upcoming transition to Eth 2.0 and proof-of-stake (PoS). But will the transition come soon enough? 

Bitcoin dominance tends to fall every crypto bull market cycle. As background, BTC dominance is a metric tracking the percentage of total cryptocurrency market capitalization made up by BTC. 

During the most recent bull market cycle, BTC dominance dropped from roughly 70% in January to as low as 40% in May. While the volatile crypto markets have since turned bearish over the latter half of Q2 2021, causing BTC dominance to pick back up again, the metric continues to trend between the range of 40% and 50%. 

Among the alternative cryptocurrencies eating up the market share of BTC, the native cryptocurrency of Ethereum, ether, is the next largest coin, making up roughly 18% of total crypto market share. While ETH is the second-largest cryptocurrency next to BTC and has been since as early as 2016, it is not the fastest-growing altcoin on the market. 

In 2021 Q2, the fastest-growing altcoin, excluding stablecoins, by monthly market cap growth, was the native token of Chiliz, a blockchain services network for sports and entertainment providers.

The chiliz token (CHZ) is the exclusive marketplace currency on Socios.com. Socios.com aims at decentralizing fanbase interaction with sports teams by leveraging blockchain infrastructure to facilitate payments for team merchandise, voting rights and other rewards. The marketplace has partnered with over 20 sporting and esports organizations including FC Barcelona, Juventus and Atletico de Madrid. 

Fans for each of these teams can purchase branded “Fan Tokens” on Socios.com that allow them to vote on certain team decisions such as renaming facilities or changing entrance songs. Since the CHZ is the exclusive means of exchange in the marketplace, the token accrues in value alongside demand for voting rights and rewards provided by the entertainers on the Socios.com platform. 

The sports industry alone has a yearly value in the hundreds of billions of dollars and could gain further value through strong customer loyalty programs like the ones being experimented on through CHZ and Socios.com. The Chiliz token is one way to speculate on the use of Ethereum-based tokens for fan engagement and the continued growth of the Socios.com marketplace as the main platform to do this. 

Teddy Oosterbaan

Block subsidies, transaction fees and miner/maximal extractable value (MEV): These are the three main revenue streams of Ethereum miners. 

In efforts to combat currency inflation, protocol developers lowered block subsidies from 5 ETH to 3 ETH in 2017, and again from 3 ETH to 2 ETH in 2019. Starting in August 2021, transaction fees are also expected to decline as a result of Ethereum Improvement Proposal 1559 and its fee-burning mechanism. The only revenue stream that is expected to grow larger and more lucrative for miners in the months to come is MEV. 

MEV refers to the income a miner receives as a direct result of their ability to insert, leave out and reorder transactions within a block. The order of transactions is of utmost importance in the context of high-frequency trading on decentralized exchanges (DEXs) where automated bots can identify buy or sell orders waiting for execution on Ethereum and front-run these trades before they get executed. 

The higher the liquidity and value being moved on-chain through these DEXs, the greater the profit opportunity for miners to earn additional income through MEV. 

*Missing values for daily extracted MEV appear in this chart as interpolated dotted lines that connects the plot points immediately preceding and succeeding the missing value

The larger MEV rewards become in comparison to block subsidies and transaction fees, the greater the financial incentive for miners to adjust not only the order of transactions but also the order of blocks themselves. In what is known as a “time bandit” attack, miners may begin to identify MEV opportunities in blocks that have already been finalized and reorganize the blockchain in their favor if potential rewards from frontrunning are larger than earnings from honest mining (i.e., block subsidies and transaction fees).

Speaking to the potential for miners to reorganize Ethereum blocks and disrupt chain finality, Georgios Konstantopoulos and Leo Zhang from Paradigm Research wrote in a blog post back in March, “This scenario is not obviously plausible: Miners are (for the most part) structurally long ETH, and such an action would directly negatively impact their ETH investment.”

However, it would appear the tools for MEV extraction by way of block reorganization are actively being built and already being executed in primitive forms. 

Edgar Aroutiounian of Flashbots tweeted on Thursday, July 8, that he had created a personal GitHub repository codifying how payments to miners can be facilitated in exchange for destabilizing blockchain consensus. Shortly thereafter, on Saturday, July 10, Twitter user “0xbunnygirl” announced their own code repository for MEV extraction through block reorgs called “Request for Reorg.” 

While the possibility of MEV negatively impacting chain finality and immutability has been a long-running concern, discussed as early as November 2020 among Ethereum researchers, the reality of this happening appears to be manifesting today. 

In light of this reality, there are a handful of defense mechanisms that researchers insist will protect the integrity of Ethereum’s blockchain. First, there is the collective will of the Ethereum community to censor this kind of behavior. Users can leave mining pools that are using their computational power, also called hashrate, to reorg blocks. Honest miners can resist accepting blocks they know to be from hostile miners engaging in these MEV practices. 

Second, there is the forthcoming upgrade to a proof-of-stake (PoS) consensus protocol with Eth 2.0, after which miners will no longer have the ability to propose blocks or reorder transactions within blocks. These two responsibilities will fall into the hands of validator node operators, who are required to own a large investment of ETH, worth roughly $63,600 or 32 ETH, and have skin in the game in order to participate in blockchain consensus. 

Neither of these two defenses is convincing. The former assumes the collective will of the community is homogeneous and aligned on resisting MEV extraction through block reorgs despite clear evidence to the contrary. For some, such as Aroutiounian, if block reorgs can be done on Ethereum and there is a clear financial incentive for them to happen, they should – regardless of how it impacts public perception of the network. 

The upgrade to Eth 2.0 and PoS as a defense against block reorgs for MEV extraction does not address the present reality and the impact these events can have on the value of Ethereum in the interim before the upgrade is ready for deployment. The readiness checklist which outlines all the tasks needed for PoS activation remains in large part unfinished. The earliest that developers estimate Ethereum’s transition to PoS will happen is the beginning of 2022. 

Ethereum needs a stronger line of defense to combat the reality of MEV extraction through block reorgs. 

Valid Points incorporates information and data directly from CoinDesk’s own Eth 2.0 validator node in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post. 

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which 46d323ddad0f574fdcc50eeefec34ed9d2039ecb. 

Search for it on any Eth 2.0 block explorer site.

New episodes of “Mapping Out Eth 2.0.” with Christine Kim and Consensys’ Ben Edgington air every Thursday. Listen and subscribe through the CoinDesk podcast feed on Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica, IHeartRadio or RSS.

Bitcoin has been around since 2009, but it’s only been the last few years where it’s been on the map of the average investor. That’s likely due to the fact that the price of Bitcoin has absolutely exploded. Even after dropping over 50% from its high in 2021, Bitcoin is still up over 250% over the last year, and over 32,500% since 2014. Whereas lots of investors have gotten excited over the prospect of becoming rich by investing in Bitcoin, not many people fully understand exactly what Bitcoin is or how it works. For example, you may have heard that the total number of Bitcoin allowed to exist is limited. But, how is that possible, and what does it mean? Will Bitcoin ever run out?

Check Out: What Is the Next Big Cryptocurrency To Explode in 2021? Consider: Is the Shiba Inu Coin the Cryptocurrency You Should Be Watching?

Here’s a quick overview of how Bitcoin is produced, how it can be limited and what it all means for the future of the cryptocurrency.

While the mechanics of the operations can get a bit confusing, Bitcoin is produced by miners, but electronic miners rather than physical miners. The way it works is that Bitcoin miners record transactions on the blockchain, which is a decentralized ledger. To record a transaction, miners must solve complex algorithms using massive computer power. Once a transaction is recorded, which occurs about every 10 minutes on average, the miner is rewarded with Bitcoin. Currently, the reward for miners is 6.25 Bitcoin, but this amount is halved every four years. In 2009, when Bitcoin was first developed, the reward was 50 Bitcoin. It’s estimated that the next halving will be in 2024, when the reward will drop to 3.125 Bitcoin.

Learn More: Where Does Cryptocurrency Come From?

Under the mining system, it might seem like there would be no limit to the amount of Bitcoin that could be produced. However, the way its source code is written, there can be no more Bitcoin produced once 21 million coins are in the system. The way the mining system is set up means that the final Bitcoin won’t be mined until about 2140, however. So, although the production rate will slow, there will still be new Bitcoin coming online for over 100 years.

See: If You Invested $1,000 in These Cryptocurrencies a Year Ago, Here’s How Much You’d Have Now

Bitcoin will never “run out,” as there have already been over 18 million Bitcoin mined and there will ultimately be 21 million in the system. However, the introduction of new supply will eventually stop. This is one of the reasons Bitcoin bulls aggressively tout the cryptocurrency. In their opinion, increasing demand for Bitcoin will eventually overcome the limited supply, thereby driving up prices exponentially.

This could prove true, as more and more businesses and even countries are beginning to accept Bitcoin as a valid form of currency. El Salvador, for example, became the first country to accept Bitcoin as legal tender on June 9. However, the future demand for Bitcoin is still far from certain, which is part of the reason there are such wild swings in its price.

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This article originally appeared on GOBankingRates.com: Will Bitcoin Ever Run Out?

Nick Sears was 17 years old when he helped build a bitcoin mining farm in Dallesport, Washington. He was 18 when he was legally allowed to buy bitcoin for the first time. And now, at 19, Sears has doubled down on his life as a bitcoin miner, saying "no" to college and "yes" to living in a room inside a data center that houses 4,500 whirling ASICs. 

"My room is sound-locked," said Sears of the acoustic retrofitting of his living quarters. "So I can't hear the machines when I close my door, but they are definitely noisy if I have my door open."

The machines generate about 80 decibels of noise apiece — but Sears says he likes being as close to the action as possible. It also beats making the half hour commute each way from his parents' house in White Salmon. 

The 19 year-old has spent pretty much every single day for the last two years teaching himself the nuances of how mining machines work – and crucially, how to fix them. He believes his education in soldering and electronics is worth a whole lot more to him than a university degree. 

"I don't think about going to college at all, just pursuing further knowledge in the repairs of the miners," continued Sears.

CNBC spoke with multiple miners for this story. Many explained that the allure of mining comes from being able to tangibly grasp the power of bitcoin. 

"If you've been to any of these data centers, the first thing you'll notice is just how vast and how impressive they are. They're huge," said explained Thomas Heller, chief business officer for Compass Mining, which works with Sears' employer, SCATE Ventures. 

"There's so much noise, and there's so much heat. There's just so much action going on. It is quite cool to walk into a data center for  the first time that's mining bitcoin, because you can really connect the intangible aspects of bitcoin as a currency, with the physical nature of these machines consuming power and doing these calculations." 

Mining for bitcoin isn't a glamorous job.

"When we first got here, we were setting up racks, creating the network infrastructure for the internet, and we essentially had to wire everything," he said. 

Once the physical infrastructure was up and running, Sears got into more of a rhythm. He's now up at 7 A.M. everyday and works from eight to four. He remains on site afterwards, just in case of an emergency, and there is a technician who works night shifts so that Sears can get some sleep.

But beyond the hours, there is no typical work day for Sears. 

"That's the cool thing about this job – I don't have a set routine that I do everyday," he said. "Every morning, I find what needs to be fixed." 

Some days, that means Sears repairs walls and other physical infrastructure. "If we have to repair a camera, maybe I'm fixing a cable."

But the biggest part of the job is monitoring and managing every one of those 4,500 Bitmain and Whatsminer ASICs to ensure they are running 24 hours a day, seven days a week. If even one of those machines goes offline, or is only running at partial capacity, the SCATE Ventures mine loses money.

That's because when someone is mining for bitcoin, what they are actually doing is lending their computing power to the bitcoin network. The more machines you have online, the better your chances at winning bitcoin.

Roughly every ten minutes, 6.25 bitcoins are created. In order to mint these new tokens, a global pool of miners are all contributing their computing power to running a hashing algorithm. But these miners aren't working in a vacuum. They're competing against each other to see who can unlock each batch of new bitcoin first. 

So the stakes are high for Sears. Being diligent and knowing how to triage issues across the entire facility is critical to success.

Some mining sites use more sophisticated software to monitor the machines, which includes checking the temperature of each hashboard within the individual miners. 

But most important for Sears is just figuring out which of his machines aren't functioning at full capacity. 

"Every day, you find the machines that have stopped hashing, then you remove them from the rack, and you troubleshoot," he explained. "You've got to find the problem with the machines. You've got to find out why it went offline."

It could be a power outage, which would affect all the machines, or it could be a network outage which could impact all of the machines or just some. 

"Sometimes they just need a power cycle or a reboot," he said.

But the hardware fix isn't always as simple as that. 

"It could be that the fan on the individual machine that is used for cooling is broken, or maybe it's the power supply that needs to be repaired or replaced," explained Heller.

"It could be the hashboards themselves," continued Heller. "Each hashboard has lots of individual chips, and those are the chips doing the calculations. I think with a Bitmain machine, if more than four chips on a single hashboard are broken, the whole hashboard will switch off. So instead of hashing at about 100%, you're only hashing at two-thirds or one-third." 

Seasonal changes in the weather add a whole other layer of complexity. 

Storms can lead to power outages or other disruptions. Heller says that in the summer, the machines can also overheat, especially at the farms which have upgraded to using more powerful units over the course of the last two years. 

SCATE's mine in Washington seems to have found a way around this problem by using its own immersion cooling technology, which involves submerging bitcoin miners in a non-conductive fluid to dissipate heat, rather than relying on fans. 

Sears may not need a diploma to mine, but taking online training courses run by Chinese engineers who work for Bitmain has gone a long way toward helping him repair specialized mining equipment.

Last month, Sears and another employee completed a virtual class through Bitmain to learn how to work on the ASIC chips on hashboards, as well as the power supplies of the S17s, one of the most popular machines now used to mint bitcoin. 

"I have a certification of maintenance repair, so lately, I've just been perfecting my skills in that category," explained Sears. "It certifies my knowledge and gives me access to buy supplies and material directly through Bitmain."

Next, he hopes to attend an in-person class in Atlanta, Georgia, to learn more about soldering. "The hard part is learning how to solder and disassemble a circuit board," said Sears.

Sears' boss, Scott Bennett, is big on giving his team access to the resources they need to get better at their jobs. 

Bennett, CEO of SCATE Ventures, is a self-taught miner who started his business in his parents' garage back in 2017, just before the last crypto "winter," when prices of bitcoin and other cryptocurrencies plunged. Similar to Sears, Bennett once lived at one of his data centers – only he opted for an on-site camper, rather than a room inside the facility itself. 

It helped that he lives within minutes of some of the cheapest power in the world. 

"All of our facilities are 100% hydro powered," said Bennett. 

The mining facility where Sears works is next to the Columbia River and directly adjacent the Dalles Dam. "We love that source of power. It's cheap, renewable, and very abundant," he said.

As for employee pay, Sears says that he makes $54,000 a year, plus full health insurance, which is paid for by the company. 

Bennett also runs some mining machines exclusively for his employees. That amounts to about .02 BTC quarterly, which by today's price equates to a $788 bonus every three months to Sears. 

"With all the miners in China going offline, the difficulty rate has been changing, so the rewards are higher," said Sears. "The last time we got a little bit more than we did the previous time, which is cool by me."

It is also possible to become a crypto miner without physically handling any mining equipment at all.

Adam Gitzes decided in early 2021 that he really wanted to mine for bitcoin. After his wife vetoed the idea of installing equipment in their home, he began to look for alternatives.

Gitzes discovered Compass Mining, which allows customers to buy mining machines for between $5,800 and $11,700, then locates them in partner data centers and takes care of the physical logistics.

"I bought the machines on the website, Compass managed the logistics, delivering the machines to three different data centers in North America," said Gitzes, who explained he spent 1.1 bitcoin -- about $60,000 at the time of purchase -- on them.

"Compass also configured them the way that I asked."

So a typical day in the life of a miner like Gitzes consists of waking up and checking online to see how much bitcoin his machines mined overnight and to ensure that none of his units are down.

Gitzes owns six machines that he says are on the "higher end." When China expelled all its miners, Gitzes says it doubled the amount of money that his machines generate daily. 

After paying the mining pool fee of 1.25%, Gitzes' miners generate about .0055 bitcoin a day, or $216 at today's prices. Daily electricity costs are about $30, so he's pulling in roughly $186 a day, or just shy of $5,700 every month. At that rate, he'll recoup his investment in about 11 months, assuming no major fluctuations in energy or bitcoin prices.

Gitzes was so impressed by the Compass business model that he quit his job at Amazon to join the team in March. "The mission to decentralize mining and make it so that everyone can participate is something that I find really important," said Gitzes.

What happened: New data shows the difficulty of Bitcoin (CRYPTO: BTC) mining is on the upswing. According to data from BTC.com the level of difficulty to mine the cryptocurrency increased by 6% on Saturday. It’s the first increase in difficulty for Bitcoin miners since the digital currency began to crash in May, according to a report from Decrypt.

Why it’s important: The rate of difficulty has plunged since peaking at a record high in mid-May. The level continued to decrease in June and July after a crackdown on miners in China, causing them to leave the country or sell their mining machines. Chinese miners were responsible for 65% of the Bitcoin network’s hash rate at the time.

The largest drop in mining difficulty occurred on July 3 of this year, when the rate fell by 28%. Followed by another drop of 4.81% on July 18.

What’s next: The increasing rate of difficulty reported today indicates more mining machines are back online. The level of difficulty increases as more minors try to earn Bitcoin, which requires computer power to validate transactions on the network. BTC is priced at over $41800 at the time of publication, after marking a low of $28600 on June 22.

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Bitcoin and cryptocurrency prices have struggled in recent weeks as a brutal crypto crackdown in China worsens (you can get ahead of the market here).

The bitcoin price crashed in May, losing 50% of its value, and has remained under pressure since. Meanwhile, ethereum, the second-largest cryptocurrency after bitcoin, has fallen by more than half, with ethereum price struggling to hold above $2,000 per ether token.

Now, after reports former bitcoin and ethereum miners in China have been dumping GPUs, suggesting at least some of the decommissioned Chinese mining capacity won't return, analysts have warned crypto prices are "in danger."

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China bitcoin and ethereum miners dumping CPUs "doesn't come as a surprise given the fact that China seriously cracked down on bitcoin mining in the country but the development may be interpreted as fundamentally bearish, nonetheless," Adam James, senior editor at Hong Kong-based bitcoin and crypto exchange OKEx, wrote in his latest analysis, adding "market sentiment has decreased significantly" over the last few days.

Meanwhile, reports have emerged on social media that China has begun blocking access to major cryptocurrency exchanges. This week, users reported that Huobi and Binance briefly required a location-masking VPN to access.

Binance, the world's biggest bitcoin and crypto exchange by volume, has been battling a global regulatory clampdown in recent weeks, with the U.S. and countries throughout Europe ramping up their scrutiny of the exchange.

China's crackdown on bitcoin and crypto mining last month forced those using high-powered computers to secure the bitcoin network and validate transactions out of the country. The expulsion of bitcoin and crypto miners from China sent bitcoin's hash rate, a measure of how much computing power is being directed at the bitcoin network, to a 13-month low over the last two weeks.

The ethereum network was also hit by China's crypto mining ban, seeing its network hash rate drop some 20% since May as miners powered down.

After dipping under $30,000 in recent weeks the bitcoin price has plateaued at just above the psychological level but its failure to meaningfully recover lost ground since its May crash has left many crypto market watchers worried.

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"There is a summer lull in the crypto market which may just be the calm before the storm," Alex Kuptsikevich, FxPro's senior financial analyst, wrote in emailed comments, warning that if bitcoin falls under $30,000 it's "likely to trigger a new wave of liquidation."

"If the market is affected by a small number of open positions, then any small storm could turn into a large-scale sell-off, disrupting an avalanche of stop orders. But the most alarming thing for crypto-enthusiasts is that such an outcome will underscore the prolonged nature of the correction, increasing speculation around a new 'crypto winter' like in 2018."

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com. Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.

As expected, Bitcoin’s mining difficulty increased this week jumping 6.03% higher on July 31. The change marks the first increase out of five difficulty adjustment changes. This was after four downward difficulty drops made it 54% easier to mine bitcoin than it was prior to mid-May.

On July 31, at block height 693,504, the Bitcoin blockchain’s difficulty adjusts itself depending on how much hashpower is dedicated to the network. The more hashrate dedicated to the BTC chain, the higher the difficulty will rise every two weeks. On the other hand, if a great number of miners go offline and dedicated hashrate drops, the difficulty will drop making it easier for mining participants to find BTC blocks.

Bitcoin’s system and how it works is mathematically predictable, which is a stark difference from the shadow finance system the U.S. government and the Federal Reserve have participated in for decades. Because Bitcoin is transparent, we know that every 2016 blocks, the difficulty will change to keep the block generation time around 10 minutes. This means we know that as of 1:00 p.m. (EDT), there’s 1,782 blocks left or 11 days until the next difficulty change.

While the last four difficulty changes made it 54% easier to mine than before May 13, the difficulty increased for the first time in eight weeks by a touch over 6%. This is because miners who went offline during the crackdown in China, have seemingly returned to some extent.

At the time of writing the hashrate is over 100 exahash per second (EH/s) at around 114 EH/s on Sunday. That’s a lot better than it was 33 days ago when 90-day recorded stats showed the hashrate down to 69 EH/s on June 28. That drop in hashrate led to the massive 27.94% decline in difficulty at block height 689,472.

At the time of writing, the mining operation Antpool is the largest bitcoin mining entity, in terms of overall dedicated hashrate. 15.48% of BTC’s SHA256 hashrate stems from Antpool which is around 17.13 EH/s of hashpower. Antpool is followed by Viabtc (14.87 %), Binance Pool (11.00 %), Poolin (10.18 %), and the pool operated by Btc.com (9.98 %). These five pools combined capture 61.51% of BTC’s global hashrate today.

Furthermore, stealth miners or 9.98 % of the global hashrate is owned by “unknown miners” with around 11.04 EH/s of hashpower. As of the mid-afternoon hours on Sunday, the current hashrate leads calculations to assume that the next difficulty change will be an increase again.

Despite the increase on Saturday, BTC blocks are still 48% easier to find today than they were before May 13, 2021. Estimates show on Sunday that the difficulty is expected to rise again in 11 days and increase around 1%. However, depending on hashrate speed, the estimate could change higher or lower as the countdown gets closer.

Today, the difficulty is around 14.5 trillion and is expected to increase to 14.65 at the next difficulty change.

What do you think about the recent increase in mining difficulty? Let us know what you think about this subject in the comments section below.

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

This week, we continue the conversation about Ethereum miners and how they’re preparing for changes to the reward dynamics of the network. Also, we take a look at what other asset types are popularly used on decentralized finance (DeFi) applications beyond ether (ETH). 

Welcome to another edition of Valid Points.

This article originally appeared in Valid Points, CoinDesk’s weekly newsletter breaking down Ethereum 2.0 and its sweeping impact on crypto markets. Subscribe to Valid Points here.

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The amount of ETH locked in DeFi applications declined 11.5% during the second quarter. Notably, the total dollar value of all crypto assets under management in DeFi apps remained steady over the same time period, which indicates a rise in other asset types such as stablecoins or governance tokens for DeFi collateral and liquidity. 

In particular, the number of tokenized bitcoin created on Ethereum has been on a steady rise since the start of this year. As of Tuesday, there are more than 250,000 tokens backed by BTC, collectively worth roughly $8.6 billion at the time of writing and representing about 1.2% of total bitcoin supply. 

While there are several protocols issuing bitcoin-backed stablecoins, the most popular one, responsible for over three-quarters of BTC supply on Ethereum, is Wrapped Bitcoin (WBTC). 

WBTC leverages a technology known as “atomic swaps” to facilitate cross-chain cryptocurrency trades. Users on Ethereum can request new WBTC tokens from certified “merchants” after undergoing necessary anti-money-laundering and know-your-customer (AML/KYC) identification procedures. New mints and burns of WBTC are tracked publicly through the blockchain, as is the amount of BTC backing these tokens 1:1 on Bitcoin. 

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Speaking to the growing volume of tokenized bitcoin in DeFi, Denis Vinokourov, head of research at Synergia Capital, said in an interview with CoinDesk in June, “It shows the hunt-for-yield trade is nowhere near the exhaustion mark and also underlines the growing comfort, as well as a sense of security, that wrapping bitcoin is a safe method in earning yield on assets, be that by retail or more professional market participants.”

The Merge is one of two upcoming code changes on Ethereum that is expected to radically change network monetary policy and reward dynamics. It seeks to reduce the energy consumption of Ethereum by an estimated 99.95%. The other, Ethereum Improvement Proposal (EIP) 1559, is aimed at improving the transparency and efficiency of Ethereum’s fee market. 

Last week, we discussed miners’ perspectives on EIP 1559. While EIP 1559 is the more imminent upgrade slated for activation on the network early next month, its impact on miner revenue and profitability is minor in comparison with The Merge upgrade, according to Igor Stadnyk, the CEO of Ethereum mining pool Mineral. 

“Basically, the current EIP is not a huge reduction [to rewards]. A huge reduction was from five to three ether. A huge reduction was from three to two ether,” Stadnyk said in a phone interview with CoinDesk. 

Stadnyk is referring to changes that protocol developers have activated in the past on Ethereum to curb monetary inflation by reducing block subsidy rewards. Block subsidies are a fixed amount of ether awarded to miners for every block they successfully find and append to the blockchain. After The Merge, block subsidies will once again be reduced, only this time from 2 ETH to zero. 

Once Ethereum merges with the Ethereum 2.0 Beacon Chain, mining on the network will become obsolete. For miners, there will be no block subsidies, no transaction fees and certainly no miner extractable value (MEV). Revenue from transaction fees and MEV will instead be awarded to users who contribute to network security by staking their coin holdings in increments of 32 ETH. 

These users, also called “validator node operators,” will most consistently be rewarded on Ethereum in the form of interest on their staked ether. For validator node operators actively running software on Eth 2.0 today, their estimated annual percentage return (APR) for a single 32 ETH deposit is between 6% and 7%. 

For Ethereum miner Brian Lee, those returns aren’t a convincing reason to make the switch from mining to validating post-Merge, given that he would likely have to sell some of his bitcoin holdings in order to have enough ether to stake. Lee’s long-term bets are on bitcoin becoming “a better store for wealth” than ether because of the experimental and frequently changing roadmap of Ethereum. 

“So I’m thinking maybe I’ll switch to [mining] Ethereum Classic,” Lee said during a phone interview with CoinDesk. “There’s a ton of coins out there. I think a lot of guys I talked to [are] thinking about going to Ravencoin after Ethereum merges.” 

As the world’s second-largest blockchain by market capitalization, Ethereum is the most profitable cryptocurrency to mine on graphics processing unit (GPU) devices. These devices are also frequently used for video gaming applications. GPUs, unlike application-specific integrated circuit (ASIC) devices that dominate the Bitcoin blockchain, can be repurposed for different tasks and computations. 

Michael D. Carter, the host of cryptocurrency mining YouTube channel BitsBeTrippin, told CoinDesk in a phone interview that according to his calculations, if all Ethereum GPU miners were to move over to Ravencoin, the price of the coin would have to appreciate roughly 10 times in order for miners to remain profitable. 

To Carter’s mind, the more likely scenario post-Merge is that miners end up splitting their computational energy, also called hashrate, across multiple different coins that support GPU mining and stay in business by spreading out to several new blockchain networks. 

“You’re going to see network discovery and you’re going to get buzz around other networks naturally because people are going to want to know: Where are the miners going to be pointing their hashrate? Is there anything as profitable? What’s the value propositions of these other networks?” Carter said.

And it won’t just be miners doing network analysis and profitability projections post-Merge for mining alternatives to Ethereum. 

Wolfgang Spraul, director of operations at Linzhi, a cryptocurrency mining hardware manufacturing company that builds Ethereum ASICs, told CoinDesk in an email, “If nobody on Ethereum is left using Ethash-PoW, [Ethereum’s mining algorithm], we will work with Ethereum Classic. And if no one there wants to use Ethash-PoW any longer, we will work with smaller coins like Ubiq.”

At this stage in the game with The Merge estimated by developers to be ready for activation early next year, mining pools such as 2Miners say it’s “too early to announce anything” concrete. 

Plus, Carter adds, there’s still lots of work to be done on the protocol development side for The Merge; as such, the Ethereum mining community will want to keep a close eye and stay involved in the development process. 

“We’re all investors and have aligned interests with regards to ETH succeeding, so it’s a bit counterintuitive to torch that to the ground [prematurely],” Carter said. “Let’s get through [EIP 1559] and then let’s get … back to The Merge.” 

Lending rates and trade volume on DeFi applications have dropped significantly over the past few months. TAKEAWAY: Daily DEX volume declined 55% from May to June, while three-month interest rates for the stablecoin USDC on Aave, the largest decentralized lending platform by total value locked, has declined from a high of over 10% to less than 4% over the same period.”.  User growth for DeFi apps, however, has stayed relatively steady, growing 12% this past month. (Blog post, Glassnode)

Jim Cramer, host of CNBC TV show “Mad Money,” announced he’s investing in ether again after selling nearly all of his bitcoin holdings. TAKEAWAY: Cramer announced he had sold “nearly all” of his bitcoin amid concerns over China’s crackdown on bitcoin mining and is turning to ether as an alternative crypto investment. The CNBC host said he bought more ether after bitcoin stabilized at around $30,000, adding that he likes Ethereum “because … it’s more of a currency.” (Article, Business Insider)

Big Four accounting firm EY has published code for a new layer 2 scaling system to help battle increasing transaction costs on the Ethereum blockchain. TAKEAWAY: EY’s project, Nightfall 3, builds upon a privacy protocol on Ethereum that the firm “open-sourced” back in May 2019. Nightfall 3 combines the use of zero knowledge proofs (ZKPs) and optimistic rollups for efficient transaction verification. The code is available in the public domain on GitHub for anyone to access. EY global blockchain leader Paul Brody said this was done intentionally to help “speed up enterprise adoption” of Ethereum. (Article, CoinDesk) 

A review of Ethereum 2.0 validator efficiency, showed the median validator is 98% effective at earning the maximum amount of rewards possible from the protocol. TAKEAWAY: The median validator is receiving 98% of its possible rewards, while no single validator reached 100% efficiency. The review shows that the majority of validator node operators are competent and can hardly improve upon current performance. (Blog Post, Pintail)

A block number has been proposed for activation of the London hard fork upgrade on Ethereum. TAKEAWAY: A GitHub pull request to lock in the release of London at block number 12965000 was submitted by Ethereum Foundation’s Tim Beiko. Block 12965000 is expected to hit between 13:00 UTC and 17:00 UTC on Aug. 4. The proposal comes after two successful activations of the hard fork upgrade on Ethereum test networks Ropsten and Goerli, with a third testnet release scheduled for sometime today on the Rinkeby network. Beiko stated in a GitHub comment, “August 4th should provide enough time to advertise the client releases that are mainnet compatible, and allow infrastructure providers & node operators to upgrade.” (Governance Proposal, GitHub)

– Teddy Oosterbaan

Valid Points incorporates information and data directly from CoinDesk’s own Eth 2.0 validator node in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post. 

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which 46d323ddad0f574fdcc50eeefec34ed9d2039ecb. 

Search for it on any Eth 2.0 block explorer site.

New episodes of “Mapping Out Eth 2.0.” with Christine Kim and Consensys’ Ben Edgington air every Thursday. Listen and subscribe through the CoinDesk podcast feed on Apple Podcasts, Spotify, Pocketcasts, Google p>

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In T-minus 10 days, the Ethereum blockchain will undergo its 11th backward-incompatible upgrade, also called a “hard fork.” This hard fork, dubbed “London,” contains five Ethereum Improvement Proposals (EIPs), each featuring code changes aimed at optimizing and improving the world’s second-largest cryptocurrency by market capitalization. 

Of these five EIPs, EIP 1559 has been the most controversial among Ethereum stakeholders due to its radical redesign of the network’s fee market. Today’s Briefing features an edited excerpt from CoinDesk Research’s latest report, “The Investment Implications of EIP 1559,” that explains the risks and reward dynamics of this code change for investors. 

This column originally appeared in Crypto Long & Short, CoinDesk’s weekly newsletter featuring insights, news and analysis for the professional investor.

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One of the most common arguments against ether as a store of value is its unbounded coin supply. 

Bitcoin, the world’s first cryptocurrency, has a prescribed and capped supply schedule that fuels an important part of its narrative with investors as “digital gold.”

While EIP 1559 does not introduce a bitcoin-like supply cap on ETH, it does activate a mechanism to curb total supply growth over time by taking a variable amount of ETH out of circulation each time a transaction is executed.

Simulations of EIP 1559 as of June 8 suggest the activation of EIP 1559 over the trailing 365 days would have burned a total of 2,967,937 ETH for a net reduction of 76% in ether supply growth over that period. 

Related: Bitcoin Investment Products See 3rd Week of Outflows

In addition to creating a bitcoin-like narrative of limited supply to ETH, EIP 1559 is expected to improve transaction wait times and remove fee-market uncertainty that damp developer and user adoption of dapps.

Finally, EIP 1559 is expected to solidify ether’s role as a form of payment for using Ethereum’s computing resources and interacting with the network’s broad system of dapps by requiring payments of transaction fees on the network to be exclusively paid in the network’s native cryptocurrency. 

Any technology upgrade comes with risk, and the most salient risk posed by EIP 1559 comes with its proposed changes to reward dynamics and payouts to miners, who face reduced earnings for their work with the activation of EIP 1559. Instead of pocketing 100% of transaction fees, miners will only receive tips from users through an optional “inclusion fee,” paid electively by users seeking priority for their transactions. 

Changing reward dynamics on its own won’t affect Ethereum’s ability to process blocks or computations. There is the potential, however, for disgruntled miners to leave the network, sabotage it or start a competing chain. If a large share of Ethereum miners exit or revolt, block times and network security would be negatively affected. 

As for users and dapp developers, the benefits of EIP 1559 may not prove to be as efficient in practice as they are in theory. A failure to deliver promised fee-market efficiencies could result in user and developer disillusionment. If that occurs, Ethereum competitors such as Binance Smart Chain and Cardano, the two largest smart contract blockchain platforms by market capitalization after Ethereum at time of writing, will undoubtedly seize an opportunity to grab market share. 

To gauge the subsequent rewards of EIP 1559 and its impact on users over the long term after activation, investors can view in real time the number of transactions styled in accordance to the EIP 1559 format as a way of tracking its usefulness in practice through privately maintained nodes or public block explorers.

Finally, the activation of EIP 1559 poses the risk of unforeseen bugs or malicious user behavior. A few have already been discovered during the process of testing EIP 1559 on public and private test networks. 

At its core, EIP 1559 is designed to make transaction fees on Ethereum less volatile and more predictable. Beyond that, however, the code change poses several risks and potential rewards to Ethereum that will be important to watch for in August. 

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Bitcoin, after losing ground all week, has suddenly shot higher—climbing in the aftermath of the bitcoin network's biggest ever so-called difficultly adjustment.

The bitcoin price added almost 5% after the bitcoin network underwent its latest two-weekly recalibration that saw computing requirements fall by 28%.

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The huge step-down, dwarfing the previous record decline of 18% set in October 2011, was caused by China's crackdown on bitcoin and crypto mining last month that forced those using high-powered computers to secure the bitcoin network and validate transactions out of the country.

The expulsion of bitcoin and crypto miners from China had sent bitcoin's hash rate, a measure of how much computing power is being directed at the bitcoin network, to a 13-month low over the last two weeks. This morning's difficulty adjustment brings the network back in line with the hash rate.

As a result, bitcoin miners around the world are expected to get much more profitable, with their machines able to "find" more bitcoin than before at reduced cost. The cost to run bitcoin mining machines, often collected together in huge mining farms, differs depending on the price of electricity, with some claiming to be able to mint new bitcoin tokens for an average price of $3,000 per A free, daily newsletter for the crypto curious. Helping you understand the world of bitcoin and crypto, every day

The decrease in bitcoin's hash power and subsequent difficulty adjustment isn't expected to last, however.

"I do expect this to be a temporary thing," says Alex de Vries, an economist and bitcoin analyst who runs Digiconomist and has created a popular bitcoin energy consumption index, speaking over the phone. "These miners are now relocating elsewhere and if you're a miner you want to get those idle machines back online as soon as possible."

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com. Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.

Do you hear that noise? It's the winds of change blowing towards Ethereum, and once they've swept through the cryptocurrency network, the bulk of demand for the best graphics cards—or any graphics card, really—will shift towards gaming, not mining. Or so that is the hope.

That's the good news (for gamers). The bad news is, this won't happen overnight, or probably even this year. There are two major updates headed to Ethereum, the first of which is called the London hard fork. Ethereum developer Tim Beiko confirmed on Twitter that this will go live on August 4, 2021, which is now less than four weeks away.

The London hard fork is a precursor to the Ethereum 2.0 update that should have a more meaningful impact on the GPU shortage (fingers crossed, anyway). It consists of five Ethernet Improvement Proposals (EIPs), and as CoinDesk notes, the most notable ones are EIP 1559 and EIP 3554.

EIP 1559 changes the fee structure by introducing a minimum fee to all on-chain transactions. As things currently stand, users set transaction fees, which are then accepted by miners. But this is getting replaced by a new "base fee" that is automatically set by the Ethereum protocol, which gets removed or burned from the network rather than rewarded to miners.

The gist of it is, this key change will potentially decrease miner revenue. As you might imagine, not everyone is looking forward to this change, though it's being done in large part to make Ethereum less volatile.

"While we think [EIP 1559] will bring better predictability for transaction inclusion, we think that fee burning is a bad idea, considering many transactions requiring extended computing resources for smart contract execution… will no longer be compensated," Slava Karpenko, chief technology officer of Ethereum mining pool 2Miners, told CoinDesk.

EIP 3554, meanwhile, is dubbed a "difficulty bomb delay," and refers to when mining Ethereum will become much more difficult with the aforementioned Ethereum 2.0 update. Barring another delay, this is now set to take place on December 1, 2021.

As gamers, this shift is the one we are looking forward to, because it could effectively kill graphics card mining. Perhaps not entirely, but Ethereum is the biggest cryptocurrency that is still mined with GPUs, rather than specialized ASIC hardware, which is predominantly used for currencies like Bitcoin.

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This entails a change from what's called a proof-of-work model, whereby mining requires lots of computational power to shift transactions and generate new Ether, to a proof-of-stake model. This means the network itself will verify transactions (or blocks) according to a miner's existing stake in Ethereum.

When this happens, it is conceivable—very likely, even—that a large number of Ethereum miners will call it quits and sell their GPUs. There is still an industry wide shortage of silicon that is affecting the overall supply of graphics cards, but used cards flooding places like eBay and Craigslist, along with reduced demand for new GPUs for mining should help the situation.

The delay to December 1, however, means GPUs are likely to remain scarce the rest of the year. Best case scenario is looking like GPUs will be a bit easier to come by in early 2022, and that's barring another time bomb delay. Or (and fingers crossed this doesn't happen) another cryptocurrency that is mined with GPUs becomes super popular in place of Ethereum.

Troubling signs for Ethereum as it nose-dived below the critical support level amid a significant amount of profit-taking, down by 5%.

Institutional investors’ weak buying pressures is yet to bail the leading altcoin, as weekly crypto investment product volume drops to its lowest level in many months.

At the time of writing this report, Ethereum was ranging between $1,980- $2,050 price levels on the FTX exchange with a daily trading volume of $17. 2 billion. The flagship altcoin has posted a weekly loss of 14%.

READ: Bitcoin suffers worst monthly drop since September 2011

Investors are reducing their crypto exposure significantly as former miners in China dump their GPUs primarily used for blockchain mining in boosting speed and efficiency. This further suggests that at least some of the mining capacity will likely not return.

Ethereum miners are also trying to sell those computing machines featuring RTX 3060 mobile GPUs bought out so quickly in Q1. Current selling prices for these laptops are around $1,000 but can go even lower.

Investors had earlier increased their buying pressure on Ethereum as it has become the most popular and most-used development platform and posts the biggest recorded real use-case among all smart contract applications.

READ: Aave on fire, as world’s biggest DeFi lending protocol gains momentum

Ethereum, the second most valuable crypto asset has already fallen by more than half, with a recent chart pattern pre-empting more downsides as it struggles to hold above $2,000 per Ether token.

The most popular altcoin is a global, open-source platform for decentralized applications. In other words, the vision was to create a platform that anyone can build applications in a decentralized manner, while data is distributed and publicly accessible.