I find it perplexing that so many (especially newbies) don't seem to be concerned about the pending Eth POS. I believe the following to be facts but if anyone can rationally argue any of these points, I would be very interested to hear it. It's quite possible I'm the stupid one but so far I haven't heard any reasonable rationale to counter the following logical chain.
1. Eth goes POS
2. Immediately, all the gpus currently mining Eth, switch to mining much smaller coins.
3. The enormous amount of hash power causes an enormous increase in difficulty for these smaller coins, resulting in:
4. Smaller coins mining profitability crashing through the floor, way below the electric cost for most miners.
At the moment, other coins are profitable. Not as profitable as Eth but nonetheless still can generate more revenue than the electricity costs. But consider a 100x increase in hash power that will result when erstwhile Eth miners switch over. 100 x hash power = 1/100 revenue per hash (This is a very rough approximation). Therefore if a card is currently earning $1 a day in revenue, it will drop to 1 cent a day. Obviously no profit at all here.
Of course very quickly people will start turning off their rigs when they see they can no longer make money. After a short period of time (weeks maybe), difficulty will drop and an equilibrium will be reached whereby the few miners with the lowest electric cost and the most efficient cards will be left mining with some degree of profitability. But the majority of current miners will be out of the game.
This is not my opinion, it is factual. Unless someone can fault my logic. (Please, please do!)
The Eth POS is not like a bear market. It's a game changer for gpu mining. There is no other POW coin that is anywhere near Eth's dominance. The best you can hope for is that EIP1559 continues to be delayed because when it happens, it will be the end of gpu mining for most people.
Probably the worst time ever to be buying overpriced cards and starting mining.
Great topic poby!
Actually it concerns me a lot and this is why today I bought the necessary hardwares to run an ETH 2.0 node operator...to slowly prepare for the worst.
Your assumptions can be correct but there's probably a lot of factors you don't consider.
First, you don't mention the price of the altcoin which can rise and offset the increased difficulty like it happened with ETH for the last weeks.
Also there's quite a lot of possible altcoins we can GPU mine (as you can see on whattomine.com) so we can expect quick hash rate migrations from one coin to the other way before the profitability is almost null. You are referring more to ASICs for most of them you cannot switch to mine another coin because they are application-specific. On HiveOS for instance with few clicks you start mining another altcoin.
Nevertheless, I do think the profitability will fall (maybe -30% at EIP1559) and maybe much more at ETH 2.0 while mining other coins than ETH.
I think ETH at the actual price is a good opportunity to buy for staking in the future. By the way on Rocket Pool you will be able soon to stake as little as 0.1 ETH and to run a node instead of 32 ETH, it's 16 ETH + 10% for the collateral.
I have been playing with the rocket pool calculator (I had to read Rocket Pool white paper to understand) and if you do abstraction of the ETH you have to stake to run a node and just look at the hardware costs, it's suuupppeeerrr profitable as much as mining ETH was 2 weeks ago. Of course market conditions are always changing so it's hard to do accurate projections but being a fan of Vitalik Buterin and having read a lot about ETH lately I do believe it's the future once ETH 2.0 will have fixed the blockchain trilemma - security, scalability, and decentralization.
Here's the rocket pool calculator:
https://www.rocketpooltool.com/The 16 ETH you have to stake is really the barrier to entry here!
But the thing is that these ETH you don't lose them, in contrary with hardwares which lose value over time, you'll be able to recover the ETH you staked in the Phase 2 of ETH 2.0 with most probably a good capital gain and with Rocket Pool you'll be able to recover them after a certain delay.
But like many people are saying, ETH 2.0 might happened at the end of this year or beginning of next year or maybe it will be postpone again and again this is why for now I continue buying GPUs and also prepare to run node operators slowly....
Viva Rocket Pool!