Cryptocurrency & Blockchain Business

Ethereum: Casper Update Will Set New Rules for Mining & Staking

The Ethereum network will go through a hybrid stage of proof-of-work and staking.

Mining Ethereum will remain viable for a while, but will start to be phased out, firstly by lowering the block reward for mining to 0.6 ETH. At the moment, the reward has been lowered to 3 ETH, as a part of the Byzantium update.

Serving as a validator on the Ethereum network will happen through a Casper smart contract, where users would pledge their coins and set the size of their stake. The new proof-of-stake mechanics would serve to define which is the “canonical” blockchain.

One of the dangers of Ethereum is an inadvertent fork, where clients find themselves on two separate, incompatible networks. The new staking mechanism would help resolve the conflict and point clients to the correct blockchain.

But the staking of Ethereum would be much less lucrative, with the final plan of receiving just 0.22 ETH per block. This is due to the much more economical nature of staking compared to mining.

Ethereum Turns Against ASIC

While Ethereum is mostly mined through GPUs, in theory all coins can see a specialized machine, or an ASIC, produced. A proposal has been made to make changes to the Ethereum protocol, which would make any available machines obsolete.

Opinions on ASICs vary, and some believe that the high hashing power increases security. Others believe this leads to centralization. Now, a new proposal has been made to create ASIC resistance for Ethereum.

It must be noted that there are limited sources on the Ethereum ASIC creation. Allegedly, a Chinese entity, Bit Continental, has engineered, or even uses the machine. The voting on a potential hard fork counted 766 votes for, and 31 against the fork.

Recently, Monero implemented an update that may have disabled miners that reportedly came online in the past months. The potential appearance of a mining operation was suspected when the Monero hash rate tripled in two months, between December and February. For now, the Ethereum ASIC is only a theoretical possibility.

Ethereum’s hash rate has also tripled since December, with more miners coming online, but so far, it is unknown whether ASIC mining has entered the equation.

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Christine Masters

Christine Masters

Business writer with a knack for bubbles and market madness.

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