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Ethereum Rebounds but Mining Difficulty Spikes as Proof-of-Stake Update Looms

After yesterday’s sudden drop, both Bitcoin and Ether have started recovering with the latter approaching the $3,000 mark once again. However, the mining difficulty (time taken to find a new block) has also grown quite significantly. Over the last couple of days, Ether reached yet another all-time high difficulty of 8.38P.

This means that the profitability of mining Ether has dropped by a notch even though the trading price is fairly on the high side. This is primarily because more and more miners are jacking into the network and looking for blocks to mine, thereby increasing the competition as only a fixed number can be excavated.

Furthermore, the transition to a proof-of-stake (PoS) consensus protocol is already underway. This will be enforced via a “difficulty bomb” that will make the production of new blocks beyond a certain limit extremely difficult to mine, thereby reducing the profits of miners exponentially.

The PoS protocol is already being tested and is expected to be released by December. One block of Ether worth $16 million is already locked into the protocol as of the 18th of May. In addition to increasing the difficulty, Ethereum 2.0 is expected to drive the price of the cryptocurrency to all-time highs, improve scalability as well as reduce its carbon footprint in one fell swoop.

Areej

Computer Engineering dropout (3 years), writer, journalist, and amateur poet. I started my first technology blog, Techquila while in college to address my hardware passion. Although largely successful, it was a classic example of too many people trying out multiple different things but getting nothing done. Left in late 2019 and been working on Hardware Times ever since.
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