The Ethereum (ETH-USD) Merge was the worst thing to happen for any miners relying on ETH hashing for passive income. The once lucrative venture has become obsolete as Ethereum moves to proof-of-stake. Now, these miners are left with heaps of worthless hardware. Or… is it not so worthless? As some experts point out, these miners actually have a new use case to fall back on.
One of the major storylines emerging from the Merge is the network’s switch away from proof-of-work, which had been its consensus algorithm since 2015. With it, transactions can only be validated and processed by solving a series of intensive cryptographic puzzles. These puzzles are also only capable of being solved by computers with sizable processing power. The very process of crypto mining is putting computers to work in solving these puzzles.
This has been an appealing way for anybody with the means to make income. All one needs to do is buy a mining rig. Of course, these casual miners must also compete with massive crypto mining farms owned by companies, which utilize many thousands of rigs. The consensus mechanism itself has been highly criticized as well. Crypto naysayers point to proof-of-work as a huge sap of energy, one many see as completely unnecessary to the market.
By transitioning to proof-of-stake, Ethereum can operate on a much more energy-efficient mechanism. This satiates the eco-conscious, with the added bonus of being much faster and cheaper than proof-of-work.
However, it leaves lots of miners in the dust. What is to become of all the Ethereum mining rigs of the world? Certainly there should be some new use case for them, lest it all turn to electronic waste. Well, there might actually be a solution for this hardware in another growing industry.
Ethereum Merge Opens Up Thousands of Miners to Cloud Computing
The Ethereum Merge may have stunted miners for the time being by taking hardware out of commission. But there’s another use case on the horizon in cloud computing. It could prove just as lucrative — and keep vast amounts of electronic waste from the landfills.
Protocol reports that the Merge will produce lots of waste if miners can’t repurpose their machines. And as the outlet points out, only about 20% of all electronic waste is actually recycled. However, experts suggest that unlike Bitcoin (BTC-USD) mining rigs, ETH miners can put their devices to use in other savvy ways.
Blockchain validating is quite similar to the act of cloud computing. Transactors on the blockchain outsource cryptographic hashing to these miners in the same way websites and other entities outsource site hosting and web services to cloud computing companies. This is opening the door for ETH miners to put their expensive hardware to use even after the Merge.
Hive Blockchain Technologies (NASDAQ:HIVE) is one of the companies getting the ball rolling on ETH mining-turned-cloud computing farms. The company says it will be using its 38,000 Ethereum mining GPUs to provide bespoke web services to new clients. Hut 8 Mining (NASDAQ:HUT) says it will be doing the same with its 180 machines, focusing on machine learning and artificial intelligence ( ) applications.
Even still, there’s also a market for secondhand Ethereum mining machines. This is because personal computers run using the same graphical hardware. However, with the CHIPS Act expected to bring down inflated GPU prices, investors will be less likely to pick up a mining machine that has been running 24 hours a day. Nonetheless, experts are pointing out plenty of second lives for these machines, hopefully bringing some solace to investors worried about post-Merge waste implications.
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On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.