The situation for blockchain miners since the start of the bear market has been fairly tricky. From increasing restrictions to limitations on how to operate in several countries, the overall opportunity for miners has greatly been reduced over the past couple of months. These conditions may worsen further, despite the major developments and increasing positivity in the market.
Infact, several mining setups and warehouses are now facing the probability of going to waste. Mining companies and related organizations have been looking for ways to not let millions of dollars worth of equipment go to waste. The companies that have been actively looking for options are Hive Blockchain and Hut8.
The main reason for these companies looking for alternative utility solutions is the much-awaited Ethereum Merge. The upgrade is likely to act as a huge blow to mining companies that have been specializing in supporting the blockchain.
About the companies
Hive Blockchain is an organization that was founded as a result of the Genesis Mining and Flore Group’s partnership. Originally founded way back in 1987 by Fran e Holmes, the organization has been a pioneering name in the blockchain and mining industry. Based in Canada, the company is one of the few within the blockchain sector to be listed on the stock exchange.
Hut8 is one of the largest digital currency miners based in Canada. It is also a listed organization and specializes in mining cryptocurrencies like Ethereum and Bitcoin. Hut8 is also prominent as a founding member of the bitcoin mining council, which is a group that actively supports and encourages mining while utilizing environmentally green methods.
Both companies have been among the top mining organizations in the world, and have steadily contributed to supporting Bitcoin and the Ethereum Network. A huge amount of the company’s revenue was initially sourced due to the ETH tokens that were mined while helping the blockchain run smoothly. However, the upcoming merge event may cause this stream of income to get eliminated.
What is the Ethereum Merge?
Ethereum is one of the top cryptocurrencies in the world and is second only to Bitcoin. Founded by Vitalik Buterin in 2015, the project was soon to catch the eyes of the entire blockchain industry, making it one of the most high-demand digital assets.
However, over the years, Ethereum had started getting a bad rep for being environmentally hazardous and for leaving behind heavy carbon footprints. In an attempt to change this, the team decided to shift Ethereum’s current PoW(Proof of Work) mechanism to the PoS(Proof of Stake) mechanism, which would essentially reduce its energy consumption by over 99.95%.
But unfortunately for the miners, this would mean that their source of income in the form of ETH would now end, as the Proof of Stake method wouldn’t require the computational power that it once required.
Looking for alternatives utility
According to an announcement by HIVE, the project for testing a portion of Nvidia A40 GPUs in cloud computing at a Tier 3 data centre is to be initiated soon. As the world’s most powerful GPU for visual computing, Nvidia’s A40 GPU is the world’s most powerful data centre GPU. Besides mining, these GPUs can be used for AI acceleration, virtual simulation, and large data centres, according to Nvidia.
Both companies would need to resort to alternative GPU mineable tokens in order to make profits that would match their previous revenue. However, a clear decision or strategy on what to do next is still in movement.
Hut8 too announced the partnership with Zenlayer, which is a cloud service provider focused on gaming, media & blockchain that has been looking to expand to Canada. Both Zenlayer & Hut8 customers shall then be granted access to on-demand HPC services.
At a point where miners will have to decide which path to take in order to sustain their businesses, it will be interesting to see how these multimillion-dollar companies will pivot and adapt to the current bearish markets.
At the time of writing, Ethereum is set for its Paris phase of the merge which is set to start on the 10th of September. Currently, ETH is trading at around $1688 with a market cap of more than $205 billion.
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