How to earn on Ethereum now. Analyst tips

ICB Fund’s Chen Limin talks about who will make money on Ethereum after the split

Ethereum cryptocurrency has moved to a new process – and soon it will be impossible to mine it with video cards. Cryptoanalysts state that it is still possible to earn from “ethereum”, but not for everyone. Stacking, which can be compared to a bank deposit, will be profitable with considerable investments – from three million rubles. What people should do with ETH in their wallets and where miners should go – in the article of Gazeta.Ru.

The Old New Ether

The Ethereum world has seen an update to The Merge, the cryptocurrency’s transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS). This means that now miners will not be able to mine new tokens. The process will be gradual.

Power in Ethereum has now shifted from miners to validators – users who contribute their share of coins to process transactions and add new tokens, Chen Limin, CFO and head of trading at the ICB Fund crypto fund, told Gazeta.Ru.

According to him, some miners who disagree with Ethereum’s policy intend to secede and continue mining ether on their own under an alternative name.

“Miners can now support a potential fork (division of one cryptocurrency into two different ones. – “Gazeta.Ru”) Ethereum and after the “merger” continue mining “old ether” with unclear prospects,” he admitted.

The expert notes that there will be two coins on the market – the base Ethereum (ETH) with stacking technology and the new Ethereum PoW (ETHW), working on the classic mining process.

Limin also talked about another option – some miners will switch to mining other coins that work on the EthHash algorithm. Ethereum Classic, Ravencoin, Ergo, Firo and Cortex are built on it.

But the situation alternatives will not save, stated the expert, to mine “ether” in any form – unprofitable.

“Profitability of “competitors” was lower than Ethereum before, and because of the overflow of miners to cryptocurrencies on EthHash many players will be forced out of business due to increased competition,” – explained the analyst.

99% green coin

The transition to the new algorithm will lead to powerful changes in infrastructure – now Ethereum does not require a huge amount of power to run video cards. The creators of the coin talk about a 99% reduction in power consumption.

According to him, in the coming months, graphics cards will become even easier to buy without fear of running out of stock in stores, and prices will continue to fall.

What’s instead of mining?

The main way of earning in the current environment inside Ethereum will be stacking, as the name of the process implies, said Rustam Burkeyev of Letit.

“Against the background of the fall of other cryptocurrencies, ethereum stacking is quite attractive in terms of profitability,” he noted.

Stacking is similar to a deposit in a bank, in that in both cases the owner receives interest on the initial investment. However, the return in the case of stacking is based on the ether user helping to keep the system running.

According to Burkeev, Ethereum owners can also explore options to earn money by trading the coin on the crypto exchange. “Trading can be profitable with the right asset allocation even when certain types of cryptocurrency fall,” the expert explained.

Chen Limin of ICB Fund believes that stacking is the best form of passive income in Ethereum after The Merge. The expert warns – only people with substantial cryptocurrency savings will be able to earn successfully.

“This will require depositing [to open a deposit in the cryptocurrency. – “Gazeta.Ru”] 32 ETH (about $48 thousand, or more than 2.8 million rubles at the current exchange rate) in a smart contract and then act as a validator,” – explained the analyst.

StakingRewards service estimates the yield of ether stacking at 4.64%.

According to him, it is possible to participate in stacking through services like Coinbase or Lido Finance. On such exchanges it is possible to buy some ether to a personal account.

Limin explained that the user then transfers ETH to the service for processing. The system takes into account each owner’s share of ether in the total mass of customers and accrues remuneration between them in proportion to their share. Most often the interest is accrued monthly, but other payout frequencies are also possible. But also not soon.

The services have no minimum amounts for investment, that is, it is possible to invest a few coins or even parts of ether coins, but we are not talking about three million rubles.

So currently, stacking is a rather slow way of earning a small amount of money. According to Limin, stacking yields could rise to 7-8% over time, but for now we should expect more modest percentages.

What will happen to the course?

“Ether did not react to the long-awaited news, although everyone expected growth, Artem Deyev, head of the analytical department of AMarkets, told Gazeta.Ru.

In his opinion, at present, the value of the coin will be determined rather by external conditions that affect the crypto market as a whole.

Chen Limin of ICB Fund, for his part, believes that The Merge brought the expected profit taking on the fact that expectations came true.

“On September 15, the exchange rate of the second most capitalized cryptocurrency fell by 10% in the moment. Prior to that event, Ethereum had shown better dynamics compared to bitcoin,” the analyst noted.

Limin is skeptical about the growth of the asset’s value in the near future.

According to his forecast, by the end of 2022, the U.S. Federal Reserve will carry out three more rate hikes and this can directly contribute to the growth of the cryptocurrency.

In this connection, it will be possible to speak about the “ether” rate at $3 thousand and more at $5 thousand only in 2023. The conditions for growth will be the Fed’s decision to change its policy and the presence of progress in the fight against inflation in the U.S., concluded Limin.

What to do with the equipment?

Vladimir Smerkis, director of Binance Russia, stresses in a conversation with Gazeta.Ru that Ethereum is still the leader in terms of liquidity and reliability of investments. And if ETH owners stay, miners will have to leave. There are three main options waiting for them:

  • switch to mining other coins (Zcash, Ethereum Classic or Ravencoin),
  • rent out equipment,
  • sell.

According to Rustam Burkeev of Letit, selling mining equipment is one of the main ways to preserve and increase revenues in the cryptocurrency market after the Ethereum update.

“It’s about selling the mining equipment and going completely into stacking. Of course, you can also try to switch to other cryptocurrencies,” concluded the specialist.

One of the world’s largest Bitcoin mining centers declares bankruptcy

Following the collapse in the price of Bitcoin, and other cryptocurrencies, several companies and platforms have declared bankruptcy due to losses.

Compute North, one of the world’s largest Bitcoin mining companies, filed for bankruptcy last week, as reported by specialized media such as The Wall Street Journal and Bloomberg.

The company, dedicated to providing services related to the cryptocurrency, including the data center for the blockchain in which it operates, decided to file for Chapter 11 of the US Bankruptcy Act, which allows companies to reorganize financially under the supervision of the US court.

In this sense, the Bitcoin mining center would be one more victim of the so-called “cryptowinter”, i.e., the bearish period that the cryptocurrency market has been going through for some months.

According to the US media report, the very fall in the price of the asset has caused the mining activity to lose profitability, especially in a context of rising electricity costs and global inflation.

Also, Yahoo Finance reported that decisions by Generate Lending, a Compute North lender, influenced the mining center’s financial situation.

Specifically, according to the portal, Generate would have taken control of some of Compute North’s assets after the latter failed to comply with some technical requirements that were established when both companies signed a loan agreement.

However, a lawyer consulted by the same media clarified that Generate Lending did not directly cause the bankruptcy of the Bitcoin mining company, although it did have an influence in accelerating the situation.

Since last May, the month in which most of the world’s cryptocurrencies began to collapse, several companies have faced serious losses of their capital, and some, such as the Celsius platform, have also declared bankruptcy.

Why will BTC be overtaken by ETH in the next cycle?

Bitcoin aims to become the global reserve currency and Ether aims to become the infrastructure of the global digital economy. However, the market value of these two is different, and this article will analyze the reasons why BTC’s market capitalization was surpassed by ETH.

Perhaps ETH overtaking BTC came earlier than expected.

Bitcoin’s goal is to become the global reserve currency, and Ether’s goal is to become the infrastructure of the global digital economy. Both visions are huge, so it would be better to compare the likelihood of the networks gaining their respective market shares.

Relative to its security budget, Bitcoin has never generated meaningful transaction revenue, instead heavily subsidizing security with block rewards. The current model is unsustainable and undermines its potential to become a global reserve currency.

Ether has become the base layer of the largest dApp ecosystem and has the best economic system of any cryptocurrency.

The network currently boasts.

$24.6 billion in DeFi TVL

84.7 billion in stablecoins

In 2022, it contributed to more than.

1.2T USD of DEX spot trading volume

526 billion in NFT volume.

I expect Ether to surpass Bitcoin by the end of the next cycle. Ether is about $150B behind in market cap, but the merger will be a strong driver of ETH fundamentals with its outstanding performance.

I expect Ether to overtake Bitcoin by the end of the next cycle. Ether is about $150 billion behind in market cap, but a strong post-merger performance will be a strong driver of ETH fundamentals.

If you look at just the dollar value of miners’ earnings, Bitcoin seems to be doing better.

Since 2016, miners’ annual revenue has been trending upwards.

But an analysis of the revenue composition reveals the problem behind …… Bitcoin heavily subsidizes security through block rewards. 95% of bitcoin miners’ rewards come from inflationary block rewards, while only 5% is real revenue from transaction fees.

PoW by design consumes a lot of energy. This is great for security, but it creates forced sellers because miners need to offset their production costs (electricity). Even with low inflation, 95% of all miner sales are newly minted BTC because little to no fees are incurred.

Bitcoin does not support smart contracts, so BTC is the only form of value that can exist on the network. Users must pay a fee on each transaction to transfer BTC. therefore, fee generation is dependent on the speed of circulation of BTC, yet users claim to be hoarders ……

In contrast, ETH is traded as a currency in the digital economy. Users pay ETH to transfer ETH, stablecoins and other tokens, or to interact with DeFi applications. Ether extends the possible actions beyond just sending, receiving and holding BTC.

During bull markets, Ether’s real revenue percentage increases along with total revenue, highlighting the reflexive nature of the network. However, when on-chain activity decreases, inversity suffers, as seen by the pullback in true revenue percentage in 2022.

Dividing 2022 into pre-merger and post-merger eras shows how Ether can address inflation through the diversification of verifier revenue. Post-merger, Ether validators receive 62% of their real revenue from transaction fees, ETH burns and MEV payments.

ETH burn and MEV are also correlated with the level of activity on the chain. More trading volume leads to higher base fee burn and more MEV opportunities. However, during the bear market, Ether net issuance was near zero and created positive value for pledgers.

The migration to PoS also resulted in a $1.7 billion reduction in ETH emissions in just 117 days. This is important for liquidity flows, as ETH requires less buying pressure to maintain the same price. Impact on Inflation?ETH has a 30-day annualized inflation rate of up to 0.00%.

Again, Bitcoin isn’t dead. It is widely adopted by individuals, public companies, and countries/regions from 2021-2022. Its community will likely work to prioritize sustainability in the near future, but its current trajectory will cause it to lag relative to ethereum.

Antminer S19 XP dropped in a bid to swing crypto miners back into profit

Phil Harvey said that this type of miner can typically last a minimum of 36 months in a facility operated by their crypto firm Sabre56.

With the Bitcoin BTC $17,154 price moving at a very steady pace during the crypto winter, the return on investment (ROI) on a new mining device seems like a shot in the dark. But a mining expert explained there may be hope for miners to make a comeback to profit. 

Phil Harvey, the CEO of crypto consultancy firm Sabre56, told Cointelegraph that there are factors to consider when checking the potential profit of mining devices. These are mining machine specifications, costs, real ROI and the economics of mining over time.

Analyzing the recently released Antminer S19 XP by mining rig provider Bitmain, Harvey noted that specs-wise, it’s the most efficient miner at the moment. In terms of costs, the crypto mining expert pointed out that the current costs of mining machines are significantly lower than in the past few months, especially if purchased directly from the manufacturer, estimating that it can go roughly $5,600 per machine.

In terms of what Harvey describes as the real ROI, the consultancy firm’s CEO explained that using their firm’s database, which tracks miner revenue from when the first ASIC miner came out up to the present, indicators show that large-scale miners can earn back their ROI in around 11 months.

On the other hand, considering the electricity costs for retail miners, Harvey said that it could take 15 months for them to get their ROI. He also explained that:

Commenting on the longevity of the new device, the CEO said that in a facility that they operate, this type of miner could last a minimum of 36 months.

Related: What happens when 21 million Bitcoin are fully mined? Expert answers

When asked if mining can be profitable in the long term, the expert also explained that mining revenue estimates don’t always play out the way it’s theorized. He noted that in 2013 and 2014 mining revenue estimates gained an average of $4,711.28. However, the real revenue turned out to be only $1,047.33. He explained that:

Harvey emphasized that the data shows that revenue per terahash will decline, projecting a potential mining collapse. But the mining expert argued that this is tangential to revenue per mining machine which he argues to have shown stability over time.

The detailed parameters about Ant Miner S19 are as follows:

Antminer S19 XP (140Th) Specifications

Antminer S19 XP (140Th) specifications, computing power consumption, power supply, usage environment and other related information are shown in the tables:

ModelAntminer S19 XP (140Th)
Also known asS19XP
ReleaseJuly 2022
Mining poolsSlushPool, NiceHash, Poolin, AntPool, ViaBTC
Size195 x 290 x 400mm
Noise level75db
Temperature5 – 45 °C
Humidity5 – 95 %