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,
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.