“Merge,” the transition from proof-of-work (PoW) to proof-of-stake (PoS) on Ethereum, is coming in Q2 2022. What are PoW and PoS? What are the differences between them?
Proof of Work (PoW), Proof of Stake (PoS), and Proof of Assignment are all cryptocurrency mining protocols. Essentially, they are the computer algorithms that allow cryptocurrencies to function.
The most popular mining methods at the moment are Proof of Work (PoW) and Proof of Stake (PoS) and are used by most major cryptocurrencies such as the most popular and most valuable Bitcoin is PoW. However, they have some notable differences.
The main purpose of the PoW protocol is to protect the network from attacks and is used to confirm cryptocurrency transactions around the world. When triggered to a cryptocurrency transaction, all unverified transactions are placed in a pool. Miners then check whether these transactions are legitimate by competing to solve complex mathematical problems using the processing power of computers.
The first miners to solve this problem will write their blocks on a public ledger and be rewarded in cryptocurrency according to the protocol. Finally, the transaction is confirmed and written to the public blockchain. Essentially, the more information users discover, the more reward they get.
The main problem with PoW is that it is extremely resource intensive and requires a lot of effort to find potential solutions to these complex problems. Also, since there are now many people participating in the mining process, the difficulty is increasing in order to keep the mining time constant. This means that the mining process is very expensive, and the protocol also incentivizes many people to buy more hardware and build large mining farms. As a result, only a handful of organizations control most of the hashing power, so many miners who cannot afford high-end equipment are excluded.
And PoS is very similar to PoW. However, there is a big difference in how the results are obtained. PoS works by putting a portion of their tokens into a trading block for inspection. The algorithm selects miners based on a number of factors, such as how many coins they own, and how much money they own. Essentially, the more shares a user has, the better chance they have of getting more rewards.
Technically, PoS is compatible with IoT devices. However, this is not a viable option as the end user will still need to keep a ledger, which means that IoT devices will be required to use much more memory than IoT devices are currently projected to use. Another problem with this protocol, however, is that it mainly benefits the big players who own a lot of tokens.
Ethereum, the second largest cryptocurrency in the world, is planning to enter 2.0 with a PoS mechanism. Once the Ethereum blockchain completely switches from POW to POS, the best place to transfer hash rate in lieu of Ethereum is Ethereum Classic, which is expected to grow rapidly. Many miners using Ethereum will be forced to switch to another cryptocurrency using POW to continue using their expensive rig for profit. As such, Ethereum Classic is one of the most beneficial projects for these miners and one of the easiest to migrate to. Facts have also proved this. Recently, with the launch of 2.0, the hash rate of ETC has soared. In the future, if miners don’t want to sell their rigs at a low price, the way out is ETC.
While not as attractive and well-known as the world’s top cryptocurrencies like Ethereum, Ethereum Classic is an interesting option for those looking for more volatility. In conclusion, the best cryptocurrencies today are those that offer low-cost mining options, and it should be cheaper to start mining. If investors are looking for the cheapest cryptocurrency to mine, Ethereum Classic would be a good choice. For example, Ethereum Classic can be mined on the most profitable ASIC mining rigs.
Taking the popular product JASMINER X4 High-throughput 1U server in the field of ETC mining rigs as an example, its hash rate is 520MH/s±10%, and the current daily output per M can be 0.00074976ETC. Therefore, the total daily output is 0.38987520 ETC, and when the currency price is $36.72, it can produce about $14.32 per day. The largest part of the daily expenditure of mining is electricity consumption. The power consumption of a 1U server is only 240W±10%, and the daily electricity consumption is only 5.76 kWh. When the electricity cost is set at $0.047/kWh, then the one-day electricity cost of a 1U server is $0.27. Taken together, the daily net income of mining ETC with the JASMINER X4 High-throughput 1U server can now exceed $14.05.
Compared with several other mining rig products on the market that mainly support ETC, although the ultra-high hash rate value can produce more ETC, its power consumption value is greater than the hash rate value. The direct impact of this is a huge electricity consumption and thus an increase in the daily cost of electricity consumption, which will be accompanied by high temperature and noise. According to reports, a new generation of “high hash rate, low power consumption” ASIC mining rigs represented by the JASMINER X4 High-throughput 1U server adopts the world’s first high-throughput computing power chip with integrated storage and computing. It opens up the computing and storage units, effectively suppressing the high energy consumption in the mining process, thereby providing optimal operating efficiency and energy-saving effects. Judging from the current cycle and long-term use experience, JASMINER X4 High-throughput 1U server can be said to be a high-scoring work.