Ethereum mining shuffle: nearly 40% of the entire network computing power in April or will evaporate

Written in front: In the coming April, Ethereum will face a deterministic computing power slump, and this is due to the continuous increase in DAG files that will cause the popular ASIC miners in the market to fail to operate. Nearly 40% of the computing power of Ethereum may evaporate. What impact will this have? In this regard, Ethhub founder Eric Conner wrote an analysis.

Related reading: Babbitt original 丨 Ethereum miners' life and death situation: 4G graphics card mining machine may annihilate the entire army in the fourth quarter ! ( Important supplementary note: Before December 2020, the capacity of the Ethereum DAG will not reach 4GB, and the reason for the E3 miner to brick in advance is the limitation of the memory controller.)

以太坊挖矿大洗牌:4月近40%全网算力或将蒸发 (Picture from: tuchong.com)

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At an Ethereum block height of 9,840,000 (approximately around April 9th), the popular Antminer E3 ASIC mining opportunity is unable to operate due to the increase in Ethereum DAG file size. According to a recent study conducted by Kristy-Leigh Minehan, it is estimated that nearly 40% of the computing power of Ethereum may come from E3 miners. There may be some changes to the exact number, and we can't know until the event really happens, but for the purpose of this article, let's continue to discuss this topic.

What will happen?

Before analyzing the impact of the decline in computing power, there are some important things to understand. I recommend that you check out the Ethereum mining page on EthHub. The most important thing is that Ethereum will have a difficulty measurement, which determines how difficult it is to mine a block on the network. As the hashrate rises and falls, this adjustment will follow, and attempts to keep the block time within a certain range.

When the computing power drops by 40%, the mining difficulty will decrease, so that the block time will return to the 13 seconds we are used to. It will take a little time, although I'm not sure how long the specific adjustment will take, let's take 30 minutes as an estimate.

However, as ASIC miners exit the Ethereum network, previously unprofitable GPU miners will replace them into the network. It is difficult to estimate how much of the lost computing power will be filled, but this should have a good amount.

To summarize the possible scenarios:

  1. Ethereum's entire network hashrate plummeted from 181.8 TH / s to 109.08 TH / s;
  2. The difficulty begins to decrease;
  3. More GPU miners are coming online;
  4. Difficulty begins to rise again;
  5. Block time returns to approximately 13 seconds;

I think it's important to note that all of this can happen almost instantly. Nothing can stop GPU miners from entering the network at the 94000th block.

Is the Ethereum network at risk?

Question 1: What will happen if the computing power plummets?

One problem with the drooping hashrate is that malicious participants enter this window (30 minutes?) And then attack the network before the difficulty is fully adjusted. The most likely way to do this is to rent computing power.

I don't know much about computing power rental, but there is a handy website that can show us the current cost of launching a 51% attack on any network.

The current cost of continuously attacking the Ethereum network for 24 hours is about $ 110,000. If we assume the worst case: 40% hashrate drops, no more GPU mining machines enter the network, and it takes 1 hour. Adjust, then the cost of an attack within this hour will drop to $ 66,000.

As a comparison, the cost of attacking the network at the beginning of 2019 when the entire network's computing power was reduced was about $ 80,000.

It is important to note that the above cost calculations assume that you can obtain sufficient computing power. However, the actual situation is that the computing power that can be rented on nicehash currently only accounts for about 4% of the entire network computing power .

Question 2: Do other ASIC mining opportunities fill the gap?

Another question I see is, after the E3 miner becomes a brick, will there be better and more efficient ASIC miners?

For me, there is a risk that it is difficult to quantify and understand.

Has this happened before?

Ethereum has also experienced a sharp decline in computing power, although the decline did not occur in a short period of time.

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What should we do?

The above is just a collection of different arguments I have seen. What follows is my opinion.

  1. This slump in computing power is irrelevant to me. In fact, I find that the slow and continuous slump in computing power is more worthy of attention. The reason is that it will give malicious actors more time (for example, weeks) to coordinate the attack. The window of this incident is very short. Although it is known, I don't know what can motivate people to attack at that moment. In fact, the computing power has declined in the past 18 months and the reward has been reduced. In the case, attacks are easier to implement. Even in the worst case, where no other miners immediately joined the network, we are only talking about the $ 12,000 difference compared to early 2019. To me, if someone wants to attack Ethereum 51%, the occurrence or not of the event is not much different.
  2. I don't know where this computing power comes from. One of the reasons we don't see the 51% attack is game theory. Does it make sense to burn your investment (ETH) to attack the blockchain for 1 hour? So far, the answer seems to be no. We have also just gone through the long ProgPoW debate, and one of them has always stated that GPU miners will not attack the Ethereum blockchain. Since most computing power is unrentable, and ASIC miners are stripped from the network, where does this attack computing power come from?
  3. Some people worry that better ASIC mining opportunities will be created and used. I don't see any particular relationship with the DAG issue. If ASIC miners can make better chips, they should already have them. There is no reason for them to wait until the DAG problem arises. I'm not saying that a better ASIC miner cannot happen, I just don't think it is related to this specific problem. I have made it clear in the past that I don't care where Ethereum's computing power comes from. This issue is just a re-discussion of the ProgPoW debate, not about the upcoming decline in computing power.

In short, this seems to be a scenario for the existing mechanism to work, and the rest will be solved by the mining market.

Nevertheless, I welcome more analysis of the issues mentioned above.