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HiveOS — Ethereum 2.0: the end of the world or a new era?

Ethereum 2.0: the end of the world or a new era?

The mining spectrum is undergoing major changes soon, and the undisputed king in that regard is Ethereum 2.0. What is it and what exactly should you be aware of with this change? This article aims to provide you with the answers you seek.

What is Ethereum 2.0?

Ethereum 2.0 (or ETH 2.0) is an upcoming and rather significant upgrade of the existing Ethereum network that is supposed to improve its performance. It involves switching to the Proof-of-Stake model (or PoS), which works in a very different way compared to Proof-of-Work (PoW). PoS doesn’t require using special hardware (which is often rather expensive), and becoming an ETH PoS staker means the following: you simply buy and stake Ethereum to receive rewards. The more and longer you stake, the more rewards you will receive.

Sounds pretty great, right? Although we must emphasize that Ethereum 2.0 has both pro's and con's. We'll briefly go over the major points below:

Advantages of ETH 2.0:

  • ETH 2.0 aims to be overall cheaper and eco-friendlier, as there will be no need for dedicated mining machines to mine it. This naturally eliminates the need to purchase/maintain dedicated mining hardware and eliminates high electricity consumptions and costs. Down times and network difficulty shifts will also become a thing of the past;
  • It aims to improve scalability, security and the programmability of Ethereum;
  • The network will become more secure without compromising decentralization.

Disadvantages of ETH 2.0:

  • In terms of ETH, your mining equipment will become useless (which is especially unpleasant in case you have a large farm);
  • Depending on the available staking option, you may need to lock your funds for a specific amount of time, which might have an impact on your profits depending on how markets shift at any point in time;
  • You will need a minimal of 32 ETH to start staking;
  • Alternatively, there may be services provided by Exchanges or third parties to partially stake or joint stake funds below the minimal amount — use these with caution and always do your own due diligence on these services.

Ethereum 2.0. Mining Industry

When will it happen?

Ethereum 2.0 is expected to be launched on December 1, 2020 (whether or not they reach the set ETA still remains to be seen). However, you can already start preparing today.

If you opt to participate in stage 0 staking, you can do so in two ways:

  • Stake 32 ETH and run a validator node yourself. For technical requirements please refer to: https://launchpad.ethereum.org/;
  • Provide your ETH to a staking provider. Be cautious of the inherent risks here and do your own due diligence on any services you may be interested in.

In order to launch the mainnet, the ETH 2.0 network needs to attain at least 16,384 validators (524,288ETH). This should be done at least 7 days before the launch. Therefore, if the required amount is not collected by December 1, 2020, the launch will be postponed. It will then take place 7 days after the required threshold is reached.

How will Ethereum 2.0 affect the mining industry?

Although there's no need to panic and start selling your hardware straight away, there are some points you should consider heading forward.

Ethereum 2.0 hasn't been launched yet, and if we are to take historical data on the process into account, it may not be launched for some time. In addition, there will be a "grace period" in which both PoS and PoW are simultaneously possible, so even after the switch you'll (temporarily) still be able to mine ETH until it fully switches over. So there's still some time to reflect and make the necessary plans to move forward.

We do however, foresee a very significant change on the horizon when ETH fully switches to PoS. The spectrum will be massively disrupted as there's roughly 260TH (as of right now) on ETH that will need a new "home". This will undoubtedly have a profound effect on alt-coins and network hashrates in general. A lot of alt-coins simply aren't built nor ready for such a big shift, while others will become extremely vulnerable to attacks — being an inherent issue for PoW.

On a lighter note, we don't expect it to be the end of mining as we know it, but this will definitely be a change that will affect multiple aspects of the spectrum.

💡Ethereum community, we'll be there to face these changes together! In the meantime we invite you to try our Hiveon Pool and mine Ethereum before the ETH 2.0 era begins!

  • PPS+ payout scheme
  • 0% Pool fee
  • We pay the transaction fees
  • Both TCP and TLS nodes in EU/RU/NA/APAC

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