Ethereum has continued to enjoy a fair share of dominance among the altcoins. That goes for miners as well. Ether miners in 2021 earned over $3 billion more than their Bitcoin counterparts. However, the positive narrative around ETH miners took a major blow this year.
Are miners out?
Well, the first thing is the much-anticipated Merge. The Merge would force Ethereum’s $19 billion mining industry to find a new home. This would shift Ethereum’s consensus mechanism from proof-of-work to proof-of-stake.
Another reason is the ongoing crypto correction. Ethereum has lost 72% in value, which means miners’ revenues would have taken a significant hit. A blockchain analytics firm Glassnode showed that miner revenue fell to an alarmingly low level.
Source: Glassnode
Ethereum miners’ revenue decreased by 27% from April. Notably, April 2022 saw Ethereum mining bring forth total revenue of $1.39 billion. Ethereum mining also saw a year-over-year monthly decline in May. Well, May 2021 saw approximately $2.4 billion in revenue generated, while 2022’s figure dipped by 57%.
Overall, the declining ETH price and the coming merge forced some miners to disconnect their rigs. The decline in ETH’s network difficulty painted or rather highlighted this fall. This processing power suffered more than a 10% plunge as the value of mining proceeds plummeted due to ETH’s price which has been in freefall lately.
On a year-to-date chart, miners’ activity slopes to about 900 TH/s after peaking above 1,000 TH/s this June.
Source: Glassnode
In addition to this, the ever-rising electricity prices around the world made it worse. Electricity bills usually make up for a big part of the miners’ day-to-day costs, and an increase in power prices would lead to fewer net profits for them.
Naturally, the decline in the Ethereum hashrate and other factors affected miners’ profit margin. Ergo, they disconnected their GPUs (Graphics processing units).
Data from the tech outlet Tom’s Hardware reported that graphics card prices continued their drawdown in June as they plummeted another 14%.