Extracting Ethereum at this time seems a more profitable business than Bitcoin mining itself. This is due to the commissions being paid by the former’s network. However, if you look at it in depth, it doesn’t seem like a good idea to switch sides.
The central point of this, as was said, is the amounts of the commissions. But, in addition, it is worth asking who benefits most from this. The answer is directly related to the mining pools.
According to data taken from the EtherScan platform, the profits of the Ethereum miners have increased due, among other things, to the increase in the Gas limit.
There are reasons for Ethereum mining to look more attractive than Bitcoin
The fact that mining Ethereum seems to be more favourable than extracting the main cryptomone is due to several reasons. But the most fundamental of these is the digital currency reward for the miners.
While Ethereum, at the moment, tends to increase the reward, Bitcoin decreases it. With a limit of 21 million existing coins, Bitcoin’s Blockchain network cuts the amount paid to the miners by 50% every 4 years (Halving). This, in order to extend mining until 2140. In addition, every two weeks it makes adjustments to the difficulty of the network.
Thus, in Bitcoin mining, unlike Ethereum, the reward per mined block dropped from 12.5 BTC to 6.25 BTC since May 11 of this year. At the same time, the price of cryptomone remained virtually unchanged in the pre-Halving and post-Halving periods. This means that the losses for the miners have totalled 50% for the time being.
In contrast, Ethereum increased the reward from 0.12 ETH to 0.60 ETH. The transactions of this crypto currency, require a mining commission to be included in a block. These commissions are then paid to the miners who include the block with the transactions in the network. Additionally, for each block mined, the Blockchain pays 2 ETH to the miners.
The business of mining pools
Although it would seem an obvious advantage, pools should not be overlooked. In both Bitcoin and Ethereum mining, the increasing difficulty forces miners to partner to mine together. The coordination of this alliance is led by the platforms known as pools.
The pools, as you might expect, work for a monetary interest. In the case of Ethereum, they are responsible for distributing the rewards, both blocks and commissions to the miners.
Some, these platforms discount to the miners a percentage of the reward per mined block exclusively. Others pay the entire block, but keep 100% of the commissions. Meanwhile, another category discounts a bit of both. In any case, the result in the pool/miner ratio seems to be the same.
The advantage of Ethereum extraction over Bitcoin Revolution mining remains theoretical. In practice, it does not represent a great opportunity to change from one cryptomone currency to the other.
Bitcoin mining differs from Ethereum mining in that the miners cannot increase the profitability of it.
In Ethereum mining, unlike Bitcoin, profitability can be increased by the miners themselves with the limit of Gas. Source: EtherScan
Ethereum, the best investment in the market?
What is the reason for this increase in the percentage of reward?
Recently, a tentative launch date for the Ethereum 2.0 was announced for the end of the year. This is the expected upgrade where the Proof-of-Work (PoW) will be replaced by the Proof-of-Stake (PoS), which means that the Ethereum extraction will change dramatically.
In the PoW scheme, the miners compete for each block, spending hash power and electrical energy in the process. This is a collective effort that consumes a significant amount of resources and makes access to the mining process very difficult for most people. The case of Bitcoin mining is the most extreme.
In PoS, the network randomly chooses the miners who will process the block. In the case of Ethereum, 32 ETHs will be required for the participation test process.