Ethereum: is mining no longer profitable?

the profitability from Ethereum mining is in decline now for several months.

The decline in Ethereum mining profitability

After peaking in mid-May 2021 when it reached as high as $0.28 per day and MHash/s, it had fallen to $0.05 between June and July but then seemed to recover, rising to almost 0 in November, $09 per day.

Since then, however, a long decline has begun, bringing it back to a minimum its current $0.05 per day per MHash/s.

As such, this appears to be practically a downtrend that started after the mid-May 2021 peak, but we only have to go back a little further in time to see that this is not the case at all.

In fact, if on the one hand the downtrend is clear, especially as of November with a 45% loss in mining profitability versus a 33% fall in ETH price, the trend is changing in the long-term.

Taking the final months of 2020 as a reference, i.e. when the 2021 bull run had not yet started, profitability is up 66% since then as it has increased from $0.03 to the current $0.05 per day.

However, the downward trend could continue, especially if the price of ETH does not increase significantly in the next few months.

Ethereum mining is still profitable today

Ethereum hash rate surge

The core problem is that Increase in hash rate, which has not only been almost constant since the end of June 2021, but does not seem to want to stop. On the contrary, it will likely continue in the coming weeks, maybe only until mining profitability drops back down to around $0.03 per day and MHash/s.

After collapsing in May and June 2021 due to the ban on crypto mining in China, Ethereum’s hashrate has increased again, from the then 480 thash/s to the current 970.

It is worth noting that at this particular time hash rate increased by 102%, while ETH price increased by 77%. This could indicate that the hashrate will not increase further should the price not increase, but taking the last few months of 2020 as a reference changes the scenario.

Back then, Ethereum’s total hashrate was around 290 thash/s, so it’s grown by 234% so far. The price of ETH, on the other hand, is up 433%, so it’s entirely possible that the hashrate could continue to rise, also due to the fact that profitability at $0.05 per day remains attractive for new miners to get on board.

Because of this, Ethereum mining is currently still profitable, although not as profitable as in recent months, but in the coming months its profitability could drop quite a bit, especially if the price of ETH doesn’t increase.

The move to the PoS

There is another unknown factor. With the future move from Proof-of-Work (PoW) to Proof-of-Stake (PoS) ETH can no longer be effectively broken down, as PoS does not require miners to validate blocks.

This could lead to many miners not investing further in new, more powerful machines, and discourage new miners from getting in. To be fair, if this momentum were already there, we should see a slowdown in hashrate growth, but it remains fairly constant. The fact that we don’t know the date of the final move to PoS and the history of continuous postponements of this momentous move could lead many miners to ignore the issue, at least for now.

This is certainly not the best time to start mining on Ethereum, while it could be for Bitcoin given the problems faced by Kazakh miners. From this point of view, however, the future of the two major cryptocurrencies in the world should soon be separated because if Ethereum moves to PoS, Bitcoin will move on to PoW.

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