Researcher: Ethereum Constantinople “Couldn’t Come At A Worse Time”

Since the Ethereum Constantinople’s activation date was confirmed, a mass of leading crypto researchers, analysts, and commentators have claimed that the pertinent blockchain upgrade is a net positive for this industry. However, a deep-dive, research-backed exposé from an industry insider has gone against popular belief, claiming that Constantinople “couldn’t come at a worse time.”

Constantinople Is Upon Us

In early-November, NewsBTC reported that Susquehanna-sourced data indicated that small Ethereum mining operations were far from feasible. Per company data, the average Ether (ETH) focused graphics card (GPU) miner had seen their profits dwindle to $0 in the month of November, down from approximately $150 during the summer of 2017. Susquehanna representative Christopher Rolland told CNBC that even with Nvidia’s flagship hardware offering, the GTX 1080, the return-on-investment (ROI) provided isn’t financially advantageous.

Related Reading: AMD Estimates Poor Q4 as Demand for Crypto Mining Graphics Cards Dwindles

Although Susquehanna’s data has since been rebutted, with more astute analysts claiming that Ethereum mining is doing fine and dandy, a recently-released report claims that the real death of GPU miners could truly be around the corner. Han Yoon, the chief executive at multi-faceted crypto startup Lunar Digital Assets, took to his personal Medium blog on Tuesday to touch on Ethereum’s impending Constantinople upgrade, slated to go live on January 16th.

Just published an in-depth article regarding the upcoming hardfork and the economic + centralization repercussions it can have on the future of #Ethereum. Someone posted the article on r/Ethereum and was trending at the #4 spot on the frontpage, but the mods decided to censor it.

— Han #TeamLunar (@hanyoon) January 9, 2019

For those who missed the memo, the non-contentious hard fork, supported by exchanges and developers at large, will implement short-term scaling solutions, while also reducing Ether issuance by one-third. Although the scaling protocols are undoubtedly beneficial, especially for Ethereum’s planned Serenity upgrade timeline, the drastic issuance shift has garnered the attention of the industry.

Considering simple supply and demand economics and the historical Ethereum issuance schedule, many commentators have lauded Constantinople as a positive catalyst for ETH’s value.

The End Of Ethereum GPU Mining “May Very Well Be Upon Us”

However, Yoon begged to differ. After an extensive analysis of Ether’s status in the broader mining realm, in which he claimed that the golden days of GPU mining are now in the rear mirror, the Lunar chief broke down Constantinople’s probable impact.

Yoon noted that as it stands, Ethereum GPU miners are operating on extremely thin margins, with a ~$2,000 rig generating a mere $20/week at average electricity rates. The researcher went on to note that this already dismal situation is “all about to change.” Although he did laud block reward reductions, like Bitcoin’s halving or events of similar caliber on Ethereum’s chain, as “beneficial economically,” Yoon noted this so-called “thirdening” couldn’t happen at a worse time.

He explained that in an environment where miners are “already on the fence [about] whether to mine or not,” the thirdening could single-handedly “sway them away from Ethereum mining.” The Lunar chief added that with the rise of Ethash ASICs, Ethereum, once thought to be an oasis in a sea of ASIC-mineable tokens, will only see this form of mining hardware propagate en-masse. Yoon noted that this controversial thematic development will only be accentuated by Constantinople.

And while firms like Bitmain, which has struggled in recent months, may be celebrating the potential rise in popularity of their Ethhash machines, Yoon noted that Constantinople’s reduction won’t benefit all participants in this ecosystem. Yoon wrote:

“The departure of thousands of miners from Ethereum will have ripple effects throughout the entire mining industry… Simple economics tell us that this will displace a lot of GPU miners, further consolidating the power of ASIC miners.”

Not only would a haircut in active miner numbers, which will push Ethereum’s hashrate lower in turn, hurt Ether’s underlying value proposition, it would also drastically increase ASIC-induced centralization.

Yoon even noted that the community-backed proposed switch to ProgPoW, which would turn Ethhash ASICs into expensive paperweights, wouldn’t do much to aid GPU miners. He explained that if ProfPoW was approved, it would take “precious months to implement,” and would likely only cause logistical headaches for industry participants. In closing, he wrote:

“It’s a bit saddening to think that the most influential cryptocurrency for GPU mining may be nearing its end for most miners. Unless the core developers act fast, Ethereum will no longer be known as the “go-to” GPU mineable coin. Ethereum will be an ASIC coin. GPU mining will never be the same again. The end of Ethereum mining, as we know it, is under significant threat; the beginning of the end of Ethereum GPU mining may very well be upon us.”w

However, other analysts, like Alex Krüger, are convinced that over time, Ethereum will actually grow due to Constantinople, rather than suffer. He claimed that in the long run, the Ether block reward “thirdening” will be “decidedly bullish.”

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