Hello everyone. I am a rather large Ethereum miner - currently mining at about 150 Gigahashes mining ETH. I have mined Ethereum since genesis block. I built a business around mining and have personally brought millions of dollars into the ETH blockchain itself through my hosting company. During the last 6 years in the industry, I have followed the GPU mining market very closely and have watched a number of projects lose their footing to 51% attacks. On the other hand, I also am a major ETH HODLer and I believe in the project long term. I participate in DeFi and am learning more about NFT’s. I have my feet in multiple “camps” of the Ethereum community, but my expertise lies in the mining ecosystem.
That all being said, major upheavals in the mining economy of Ethereum do not happen in a vacuum. Ethereum has enjoyed being the “best in class” for mining since its inception and has not had to worry about a lot of security problems that many other PoW chains are forced to address. And as a result, I believe that has contributed to a large degree of hubris over the last year or so. Reading ETH twitter confirms this hubris to me on a daily basis. This kind of hubris looks to be playing a large role in downplaying miners’ concern and misrepresenting their concerns as “greedy.”
As a result of talking past each other and seeing each camp as having nefarious intentions, communication seems to have broken down completely.I am reading many tweets about how miners are purposefully trying to stop Ethereum development. I have seen tweets arguing to reject 969 simply because miners attempted to show that a 51% attack is possible NOW, which means it is far more possible after revenue is cut in half. And this perhaps misguided move was attempted only after Bitsbetrippin has built models around the risks that appeared to have been ignored. I’ve seen tweets that miners tried to 51% attack the network. The only party who could have 51% attacked the network IF that threshold was reached was Ethermine and they weren’t even a party to the “collusion” effort. So this claim is nonsense, and it demonstrates to me that a lot of the influencers are overreacting to the miners looking to prove a point.
Miners have no intention of stopping development on the network, as some people claim. Miners know PoS was on the roadmap, and we have accepted reduction in block rewards multiple times (that were meant to increase price but didn’t). We understand fees are high and we want DeFi and NFT’s to grow. There was obviously miner opposition to EIP1559, but miners have coalesced behind BBT, who is not proposing we remove EIP1559 at all. What are we stopping exactly? In fact, there have been a few miner-backed proposals that did not get accepted. No one is saying devs are trying to stifle development on the network as a result of these EIP’s not getting accepted. I got in this space for its long term utility, and to support in a way I understood how, not to leach on to the work of others. I support layer 2 solutions, PoS, and once it was accepted by ACD, EIP1559.
Miners are seen as a carbon-creating evil that must be stopped at all costs. Every single miner I know mines green, including my business. Those that don’t usually wise up and send a green mining co their equipment. We get all carbon neutral power. And that is the norm because power is cheaper when it is renewable. Smart miners set up their shops in renewable, asymmetrical energy production sites where supply varies wildly, and we can capture the difference in supply and demand. You are seeing this daily with wind, and seasonally with solar and hydro.
Miners lately have been characterized as not ETH HODLers, which is untrue. I peruse various forums and groups all the time and miners are so excited about their mining rewards and plan to hold. I personally am holding as much ETH as I can. I have purchased 0. That is mind boggling to be able to participate in crypto finance by just providing a service to the network.
Furthermore, miners are characterized as bad because they have overhead v. stakers which do not. I advise to all of my clients to grow their ETH as much as possible, and pay their hosting fees to me from more outside investment. Almost all of my clients have not sold a single ETH. Furthermore, my business is able to HODL all our ETH by sustaining our existing and bringing on more clients. We have not sold a single ETH since June of last year. Mining businesses can never sell their ETH by intelligently designing their business models.
Now that I’ve addressed many of the ad hominem or general attacks against miners, I hope I can address the miner concerns as they relate to ETH which are as follows:
- The change in rewards is too stark, too quickly. Here the local utility raised the rates of crypto miners, but they did so over the course of four years in order to give crypto miners the chance to adjust their business models. While I wish the increase wasn’t as steep, the truth is the utility was able to retain much of the revenue from those businesses as they did not go under. One county over, their utility raised rates overnight 500% and it killed a number of jobs there in one day. The utility has since reached out asking why the miners are now offline. They thought they could simply absorb the cost differential, and now the utility gets 0 revenue from those businesses. The point is, in multi-billion dollar industry, change is designed to be incremental so we can see the effects of policy play out. EIP1559 as its written does not allow devs the time to react if there was a miscalculation.
- The risk for 51% attack is real, and Ethereum has a lot of enemies right now. The truth is there have been over a half a dozen 51% attacks and all of them were during that unstable transition between GPU miners and ASIC’s, or not best “in class” mining hashrate. VTC had Lyra ASIC’s, ZEN had Equihash ASIC’s, ETC was not best in class. Ethereum may find itself in BOTH situations where ASIC’s are proliferating on their network, centralizing hashrate, AND RVN can compete for GPU hash due to its high emission rate relative to Ethereum. RVN does not need as a high of a price because its emission schedule is so much higher. Profitability falling off a cliff during a bull market leaves a lot of hashes on Nicehash wondering where to go. It’s kind of a perfect storm.
- Raising the BR to 3 and tapering is still in line with minimum viable issuance policy (MVP). I have seen some disingenuous arguments made saying we cannot raise the BR as its an increase in issuance. This is not the case. Miners would still experience a net loss in effective revenue the day when EIP1559 launches. And through the burn mechanism, it woud be a net issuance decrease as well. And miners would likely accept (I would) a tapering schedule that would be a net loss in Ether over x period. The point we’re trying to make is that the shock in the mining economics causes a risk. We are not fighting for more Ether in the long run. The timetable to 2.0 is the main driver for that.
- Some stakeholders are just saying they’re going to rush 2.0. This is dangerous also, and anyone who argues it is not is taking an emotional stance. It is absolutely dangerous to rush a massive security consensus change on the 2nd largest blockchain in the world because of political reasons. ETH should be focused on scaling, not politics.
Anyway, I hope this is a level-headed post in a heated discussion around EIP1559 and Bitsbetrippin’s EIP 3368. I think its important to retain a sense of community. Miners have been getting beat up lately, and it’s actually kind of emotional to some of us to steer our entire career towards protecting a network silently in the background, only to have the entire segments of the community seem to switch gear and beat up on you. No matter what the outcome, I wish ETH success. I will be HODLing.