Why is Ethereum’s hash rate low? (Why does Ethereum mine less and less?)

Why is Ethereum’s hash rate low? Editor’s Note: This article is from Caiyun Blockchain (ID: cybtc_com), authorized by Odaily Planet Daily.

Ethereum’s hash rate started to decline in May 2018, and by the end of 2020, it has returned to its highest level in history. It has been about 6 months since the end of 2017, but Ethereum’s mining costs have been getting lower and lower, and it is currently in a relatively stable state. If there is not enough money to support the Bitcoin network, it is not conducive to the development and progress of Ethereum. Why is Ethereum’s network hash rate low? Why are there fewer Ethereum nodes? Why does it take a long time for transactions to be confirmed and new blocks to be generated without being able to be packaged? These are some of the reasons mentioned by some people in the Ethereum community. The total difficulty of the Ethereum chain is a very small value. So, although Ethereum can process 1,000 transactions per second, it only accounts for the hash rate of one million bytes, so the calculated result is very poor. This has led some developers to decide not to use Ethereum in order to reduce gas fees or even improve performance. Since Ethereum is a highly scalable and decentralized platform, Ethereum’s TPS is not high, but this data should affect the overall efficiency of the entire platform, especially for large-scale DApps like EOS, which have a very high throughput. The same goes for the price of Ether. However, as the price of Ethereum continues to soar, DeFi projects and other types of applications on Ethereum are also growing gradually. Although the ETH 2.0 upgrade plan may be launched in the short term, it is still a big problem for most cryptocurrencies.

Ethereum’s main competitors, including Binance, Coinbase, Bitfinex, etc., have announced their own native tokens, Ether. They hope to use these newly issued tokens to incentivize people who are unfamiliar with the network to play games. The company behind Ethereum, the Ethereum Foundation, is actively promoting the launch of this project. The Ethereum Classic team recently proposed a new proposal called “Ethereum Improvement Proposal” (EIP-1559) to solve the congestion problem of Ethereum. According to the official introduction, “The updated EIP-1559 aims to reduce transaction sizes in the current consensus mechanism.”

This proposal is based on EIP-20, which includes a new protocol called Proof of Stake (POS). By introducing a new PoS algorithm to increase stake verification, it ensures that the stake verification process is more efficient and secure. When Ethereum reaches a certain scale, the system will automatically adjust the proportion of workload and add it to each block, making it a larger network than the existing Ethereum network.

Why does Ethereum mine less and less

Editor’s Note: This article is from Cointelegraph China (ID: cointelegraphChina), author: ANTÓNIO MADEIRA, authorized by Odaily Planet Daily.

In the past week since the beginning of this year, Ethereum miners have mined blocks containing approximately $200 million worth of ETH. Despite the decline in Ethereum’s price and trading volume, its hash rate has been steadily increasing. According to Glassnode’s data, currently about 65,000 ETH has been mined (5% of the total supply).

As more and more nodes join the Bitcoin network, these mining companies are starting to provide services to other blockchains. This indicates that miners are transferring their businesses to this industry. Is Ethereum the digital gold? Why does a smaller number of Ethereum mining pools lead to more energy consumption? To explain this, we need to understand a basic fact: Ethereum has migrated from a Proof of Work consensus mechanism to a Proof of Stake mechanism.

Nowadays, many people are trying to make cryptocurrency payments or exchanges using their wallets. Although this process is time-consuming and expensive, due to Ethereum’s scalability, it can actually be used to handle various complex proof of work tasks and other complex functions.

For example, when a Bitcoin holder’s balance is greater than $100, they can receive 1 BTC as a reward. Then, the balance of Ether holders will decrease, thereby increasing the supply of the entire ecosystem. If the price of Ether continues to rise, it means more profit opportunities for miners. And for Ethereum, this is a good thing because it not only makes it cheaper but also provides better security.