Why Ethereum mining revenue fell and what does it depend on

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On the Ethereum network, finding blocks on average takes 13.2 seconds. This value can change, that is, finding blocks can take both 1 second and 1 min

Why Ethereum mining revenue fell and what does it depend on
What factors affect Ethereum mining income.

Let's say you have a non-buggy, non-freezing mining farm that runs 24 hours a day, and its hash rate is constant. It doesn't matter what size your mining farm is. This can be a single graphics card in your home PC, or a huge farm of many such graphics cards. All of these factors affect in the same way.

It goes without saying that I'm talking about a constantly and smoothly running farm. This means that if you experience any failures every few hours, then you need to fix them and only then move on to mining.

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So, what factors influence earnings from Ethereum mining.

  • The complexity of the ETH network. This means that a lot of competition with other miners is bad.

  • The workload of the Ethereum blockchain: the  more often ETH users use the network in order to conduct a transaction and transfer, the better.

Let's take a closer look at each of the parameters.

Hashrate and complexity of the Ethereum network

On the Ethereum network, finding blocks on average takes 13.2 seconds. This value can change, that is, finding blocks can take both 1 second and 1 minute, but on average this is 13.2 seconds. This is the most important parameter: the network monitors it and keeps it at 13.2. The more miners there are, the higher its complexity and the more difficult it gives the problem, the solution of which is needed to find the block. It also works the other way around.

To put it simply, if there are many miners on the network, and blocks are found more often, then the network increases the complexity of the tasks. Few miners - the complexity is reduced by the network.

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Since the average block time is constant, the number of mined blocks is the same every day. A total of 6,500 blocks can be found per day. Let's say your hash rate is stable 100 MH / s. If the hash rate of all miners in the network is 1000 MH / s, then you will get 1/10 of the reward, if their hash rate is 10,000 MH / s, then your reward is 1/100 of the reward.

The more miners there are in the network, the less ETH you will mine daily.

The good news is that the hash rate of the Ethereum network has already grown so much that due to the arrival of a new group of miners, it does not affect the hash rate so much. If you look at the statistics of the network hash rate growth per year, you will notice a 2.5 times increase. 

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Ethereum network users use it in the following cases:

  • Translations. ETH transfers from one person to another. 

  • Execution of smart contracts: cryptocurrencies and other NFT tokens, decentralized finance like trading exchanges, etc.

2 ETH is a reward corresponding to the found block, which is due to miners. This is the basic value that motivates people to mine. If, for example, people are not currently performing any manipulations with money, miners will still be rewarded.

Each user of the network has a desire to make his translation or interactions with smart contracts as quickly as possible. The more often users use the network, the greater the increase in the commission for the transfer or execution of the smart contract. Miners, on the other hand, include transactions with the highest commissions in blocks in order to get more earnings. Using the term miners, we mean, first of all, mining pools (a special mining service that combines the power of all computers into one). Mining Ethereum alone is not possible, as it requires huge amounts of power.

From each block found, as well as the commissions included in this block, the mining pool receives 2 ETH. If the day is not so busy, then transactions can run up to 1 ETH, which in addition to the main reward of 2 ETH is equal to 3 ETH. If the day is busy, then commissions can reach up to 10 ETH or more.

So, for example, a block of 24.88 ETH, of which 2 ETH is the main reward, and 22.88 ETH is the commission. So, from one block, the 2Miners mining pool received 24.88 ETH, which was then distributed among the miners. 

Why is the mining calculator lying?

The thing is that such calculators simply analyze old data and, based on this, show you some value. The calculator is just a tool to help you estimate mining income. The calculator does not predict how heavily the network will be loaded at any given moment. Nobody knows this. 

Let me give you a simple example.

CryptoKitties are gaining popularity on the network (CryptoKitties is a collectible blockchain game in which people buy and breed virtual pets. Part of the transactions on the Ethereum network goes to their purchase), and everyone runs around and buys them. The Ethereum network saw an increase in fees. Going into the calculator, you will see that your earnings will be $ 4 per day. The next, their popularity dropped, and instead of your "promised" $ 4 per day, you get only $ 3. This also works in the opposite direction.

Mining profitability - in dollars or ETH

Miners often estimate their income in local currency (dollars or rubles), depending on where you live. This is reasonable, since everyone is trying to earn as much as possible in local currency.

However, they often have a question: "What caused the mining revenues to fall?" It's all about the course of Ethereum itself. If your income in local currency suddenly dropped, first of all look for the problem not in your computer equipment or in the mining pool, but in the course itself. Maybe the situation is that Ethereum has fallen in price. Therefore, you must first of all watch the current Ethereum rate in ETH.

Why has Ethereum mining income increased?

If you are asking a similar question, then re-read this article again properly. You can easily find exactly the factor that influenced the growth of income. You need to pay attention to the congestion and complexity of the network. It is also worth looking at the current Ethereum exchange rate in ETH.

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Cryptocurrency Magazine - Crypto Market Updates: Why Ethereum mining revenue fell and what does it depend on
Why Ethereum mining revenue fell and what does it depend on
On the Ethereum network, finding blocks on average takes 13.2 seconds. This value can change, that is, finding blocks can take both 1 second and 1 min
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