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Ethereum is actually an encrypted digital currency that is very similar to Bitcoin. To be more precise, its name is Ethereum, and its English abbreviation is ETH. It is actually similar to some minerals such as gold mines and silver mines in our nature, but it is different from the minerals in our nature. It requires the use of some special tools to dig. This special tool is actually a computer, a computer that is more powerful than the computers we generally use. It is equipped with a professional mining chip. Many investors want to know what Ethereum mining is all about? Doesn’t everyone know that Ethereum mining is risky? Let the editor of the currency circle talk about it below.

 What is Ethereum mining?

Ethereum, like all blockchain technologies, uses an incentive-driven security model. Any node claiming to be a miner on the network can attempt to create and validate blocks. Many miners around the world create and validate blocks at the same time. Each miner provides a mathematical "proof" when submitting a block to the blockchain. This proof is like a guarantee: if this proof exists, then the block must be valid.

In order for a block to be added to the main chain, a miner must provide this "proof" faster than other miners. The process of verifying each block through a mathematical "proof" provided by miners is called proof of work.
of
work). Miners who confirm a new block will be rewarded with a certain value. What are the rewards? Ethereum uses an intrinsic digital token—Ether—as rewards. Every time a miner proves a new block, new ether coins are generated and rewarded to the miner.

 Are there risks in Ethereum mining?

Everyone’s general expectations for the progress of 2.0 have been introduced above. If the progress far exceeds everyone’s expectations, there may not be that much time left for graphics card mining. But even according to the most optimistic forecasts, it will still be at least a year away. According to the above prediction of the payback cycle, within one year, the mining machine investment has basically paid back, so there is no need to worry too much about this risk.

In addition, there is a topic related to Ethereum 2.0 called "difficulty bomb". In the final analysis, this is closely related to the progress of Ethereum 2.0. When the development of 2.0 does not meet expectations, rashly detonating the difficulty bomb will bring a big blow to Ethereum, so the difficulty bomb is very likely to be postponed again. . By the same token, even if there is no delay, there is still one year left to start mining leisurely.

EIP is Ethereum Improvement
The abbreviation of Proposal, which is an Ethereum improvement proposal. EIP is usually proposed by the community. After full discussion, the development team confirms acceptance and updates the proposal content into the code, and then pushes it to everyone for upgrade.

The description of this proposal is relatively complicated. If you are interested, you can search and have a look. In short, if this proposal is passed, the mining fee part of the current mining income will be greatly reduced to almost 0, leaving only The next block reward itself. This will bring relatively large losses to the miners. Before Defi became popular, this loss was about 10%-15%. With the current high mining fees, this loss will be 40%.

We will not evaluate this proposal, but only care about the impact on miners. It is undeniable that once this proposal is passed, it will be a relatively big disadvantage for miners. But first, the proposal itself is still under discussion and has no final conclusion. And according to convention, Ethereum generally only has one, or at most two major upgrades every year, at the beginning of the year and in the middle of the year. In other words, even if this proposal is passed immediately, the fastest implementation time is January 2021, leaving miners with at least 4 months. The development team is currently mainly focusing on 2.0. We judge that the probability that the proposal will be passed this year and implemented early next year is not high.

The above content is the detailed answer of the editor of the currency circle to the two questions of what is Ethereum mining and is there any risk in Ethereum mining? In fact, in recent years, the difficulty of Ethereum mining has been increasing. After the difficulty of Ethereum mining is guaranteed, some miners who have hedged will be very painful. Even the miners who have not hedged will face losses. decline. Through the historical data of Ethereum, we can see that, except for the crazy bull market in 2017, the computing power of the entire network of graphics cards has remained at a relatively stable level, so the difficulty of Ethereum mining has not skyrocketed. Even if there is a slight increase, it is unlikely that a surge will occur in the future.