The Blockchain Gold Rush And How EIP-1559 May Change Everything

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NFL Approves Name Change for San Francisco to the 21’ers

No, the NFL did not approve nor did the San Francisco 49ers request a name change. However, there is a modern day “gold rush” going on and you can do it right from the comfort, if you like hot temps, of your own home! What is it you may ask? Well, it’s called cryptocurrency mining.

Now, the cryptocurrency market is in a current bull market. Multiple mining calculators you can find on the inter-webs all agree that mining Ethereum (ETH) is profitable with graphic card (GPU) mining rigs; like the one pictured below.

With the latest releases of nVidia RTX 30 series and AMD Radeon 6000 series GPUs, the market to purchase these cutting-edge GPUs is causing such a high demand, not just from the mining community, but from the gamer community too, combine that with COVID-19’s effect on the economy and supply chain issues, the manufacturing and distribution of these new GPUs is being significantly affected to the point that prices on the secondary market, a.k.a. scalpers, are taking it you know where to prospective buyers.

Is this all bad news? No, it is not!  Even with 2x or even 3x MSRP on these new GPUs or purchasing nVidia RTX 20 series and AMD Radeon 5000 series GPUs at nearly their former MSRP prices, you can still turn a profit in the first year and hopefully capitalize on more profits after that before EIP-1559 and ETH 2.0 are fully implemented.

What the heck did you just say?

Well without getting all technical, the 50,000 foot view is this…At some point ETH will be changing paradigms from a Proof of Work (PoW) to a Proof of Stake (PoS) cryptocurrency.  This means that you can no longer mine ETH once ETH 2.0 is fully implemented.

Or can you? Will ETH hard fork like it did from ETC and be called ETH 1.0? We just don’t know this for sure and this is part of the gamble that one takes if you’re getting into cryptocurrency mining right now.

Additionally, EIP-1559 is a policy change on the ETH blockchain on how transaction fees called gas is charged; gas fees are paid in a unit of measurement called gwei. … OK, enough with this technical jargon!!!

Simply stated, right now when some uses a DAPP (an app on the ETH network) or does a transaction like buying, selling, or exchanging to another cryptocurrency with ETH, there’s also an associated gas fee. These gas fees get shared with the miners that are solving (hashing away) the Ethash algorithm.

When EIP-1559 goes into effect, the gas fee structure will be drastically altered whereby miners may see a decrease in rewards based upon these transaction fees. So, while your mining rig right now may be pulling in $10/day, this may not be the case when EIP-1559 is initiated and you could see dramatically less profits.

For those that have been mining ETH for a long period of time, they may have already recovered their equipment costs and only have to worry about electric costs for their operations. For new miners, this will be a gamble because you may or may not recover your equipment costs, especially at the high price for GPUs and the low supply to source and get GPUs into service, you may lose money in the end.

Let’s talk some numbers and get right down to the bottom line! Well, there’s still a couple of things we need to go over before we start saying, “Show me the money!!!”

When you plan out your cost-benefit analysis, there are several key metrics that you need to evaluate.

First is the cost of the equipment. There’s the cost for the mining rig bare bones setup and the then the cost of the GPUs. The bare bones setup is essentially the same as a desktop computer; with the exception of the motherboard that’s specific to mining with multiple GPU’s.

Next, the GPU’s metrics that one should consider in your cost-benefit analysis is the hash rate, power consumption, and the cost. The higher the hash rate and the lower the power consumption and cost, the better option for your mining rig. I have found that the nVidia RTX 2060 Super and RTX 3060 Ti are some of the best options for mining.

The RTX 2060 Super has an entry point of ~$400 on the secondary market with an average hash rate of 42 MH/s consuming 125W of power. The RTX 3060 Ti which MSRP is $399 but the secondary market is ~$675 has a has rate of 60 MH/s while consuming 130W. Yes, the RTX 3070, 3080 and 3090 do have much higher hash rates than the 3060 Ti, but their cost and power consumption are much higher too. While you may plan out a mining rig with higher density for future mining operations for other PoW coins, the 3060 Ti is too dang good of a deal to maximize your profits and minimize your costs!

No I’m not an nVidia fanboy … OK, I am … But AMD Radeon cards just take too much extra steps to get them to work efficiently and on top of that, they don’t even report the proper power consumption in the software making you buy additional devices to monitor the power draw from the wall outlet. OIY VEY !!! nVidia just works straight out of the box like a proper microelectronic device should. In all seriousness, the nVidia 3060 Ti is the absolute best well balanced GPU mining card for ETH at the time of this article.

For crying out loud, when am I going to start showing the $$$ ?

Ok, ok, so if you were able to source a bare bone system at ~$1,200, 6x RTX 3060 Ti’s at ~$4,000, at current ETH market value and network difficulty, you could be pulling in approximately $21/day, $645/mo, or $7,900/yr after electric cost of $0.12kW/h and a 3% pool fee which is typically standard with mining pools. This could potentially net you a profit in the 1st year of $2,600’ish with an ROI of 9.7 months. You better hurry up, because ETH 2.0 could be fully implemented anytime between now (not really) and speculation of 2022 Q3 to 2023 Q1-4, so get in that 1849 spirit and put on your waistcoat and top hat and get mining ETH today.

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