Climate

What the Ethereum Merge could mean for mining rigs

The Merge is almost here, raising the question of what will happen to all the mining rigs that are about to become useless.

An employee wearing a protective face mask inspects Sapphire Technology Ltd. AMD graphics processing units (GPU) at the Evobits crypto farm.

When it comes to Ethereum’s Merge, determining just how much e-waste will be added to the world’s growing pile is unclear but still troubling.

Photo: Akos Stiller/Bloomberg via Getty Images

The Merge is finally happening.

Ethereum is upgrading from proof of work to proof of stake, with the switch likely to happen in the coming week. If successful, this will be a huge win for the climate; the Merge is projected to cut energy consumption tied to mining by about 99%.

It’s not all cut-and-dried though. An open question post-Merge is what will become of the hardware used to mine ether, which will essentially become stranded assets. These suddenly useless rigs could be chucked in the trash, contributing to our mounting e-waste problem, or repurposed in other ways and continue to fuel the climate crisis.

Crypto mining’s monster carbon footprint comes courtesy of the GPUs used to do the calculations that keep the blockchain secure, all running at the same time. Both bitcoin and Ethereum, the world’s two biggest cryptocurrencies, currently rely on this approach, known as proof of work. Ethereum’s switch to proof of stake will only require one computer chosen at random to do the task, making the need for thousands of mining rigs all working in tandem suddenly obsolete.

What happens to mining hardware at the end of its life is also a problem for the climate. Bitcoin mining contributes an estimated 37,000 tons of electronic waste per year, an amount roughly on par with the Netherlands. This concern has caught the attention of the White House, which cited the research in the crypto and climate report it put out last week.

That e-waste can damage the climate and is an even greater concern given the threat it poses to the health of communities adjacent to dumping sites. When not properly disposed of, it can cause air and water pollution, as well as exposure to toxic elements like lead and mercury.

E-waste can be recycled, but it usually isn’t. In general, only about 20% of it is ever actually recycled, according to a UN report.

When it comes to Ethereum’s Merge, determining just how much e-waste will be added to the world’s growing pile is unclear but still troubling. “Determining how much electronic waste this is going to produce is a tougher question,” said Alex de Vries, the founder of Digiconomist, the source of the bitcoin e-waste estimate cited by the White House.

Unlike bitcoin, Ethereum mining rigs can generally be repurposed for other uses, according to Sam Huestis, an associate with RMI’s Climate Intelligence Program. (Bitcoin mining rigs have become so specialized, they’re basically unable to do anything but mine bitcoin.)

Some of the biggest mining companies have indicated that they’re going to be repurposing their rigs for AI and cloud computing.

HIVE Blockchain Technologies’ roughly 38,000 GPUs used to mine Ethereum “can be used for cloud computing and AI applications, and rendering for engineering applications, in addition to scientific modeling of fluid dynamics,” the crypto mining company said in a statement.

Another public mining company, Hut 8 Mining, which installed 180 GPUs in its data center in August despite the coming Merge, said that “the multi-workload machines will be designed to pivot on demand to provide Artificial Intelligence, Machine Learning, or VFX rendering services to customers.”

For the most part, however, Ethereum mining is still very decentralized, with many small-scale miners and individuals operating much more modest setups out of their basements or garages. What they’ll do is still up in the air.

Many of the graphics cards used for Ethereum mining “will be out of business” post-Merge, de Vries said, but they can theoretically be put on the resale market, since they’re the same graphics processing used for gaming or photo and video editing.

The caveat, however, is that gamers and video editors aren’t necessarily eager to buy secondhand GPUs that were previously used for mining, since mining crypto all day puts a lot of strain on the hardware. The 24/7 use of these machines at high temperatures means the components degrade faster than your average GPU. “It’s a wear issue,” Huestis said.

Moreover, global GPU prices are already falling, in a classic tale of decreasing demand and surging supply. Miners looking to offload their out-of-work rigs aren’t likely to get much in return for them, increasing the odds of them being tossed out.

Another scenario is that these rigs could be repurposed to mine other proof-of-work chains, like Ethereum Classic, which was created after a fork in the Ethereum blockchain in 2016. Miners could also mutiny and continue mining Ethereum via proof-of-work, creating another fork in the blockchain. But incentive to do either of these things would be low, given how much less these assets would be worth.

For context, the value of Ethereum Classic is about 2% of Ethereum’s worth today, so there isn’t much incentive for miners to switch to mining this much smaller network. What that means for miners is that the cost of running these machines would likely be greater than the potential payout. “Other networks are too small to sustain that many devices,” and a mass transition is “highly unlikely,” de Vries said.

In either case, switching to proof of stake won’t necessarily negate the climate impacts of crypto mining, despite all the rosy predictions.

The mining sites where Ethereum rigs are running aren’t just going to be turned off, according to Andrew Webber, founder and CEO of Digital Power Optimization, a cryptocurrency mining-as-a-service startup. Most of those mines could simply dump their Ethereum GPUs and install mining rigs for another blockchain, likely bitcoin, which consumes much more energy than Ethereum. Bitcoin miners will likely be eager to move into the vacated sites, given the shortage of hosting space.

That scenario probably won’t come to pass right away, given the recent crypto crash. Miners are getting squeezed, so they’re unlikely to spend a lot on expansion at the moment, de Vries said. If Bitcoin prices were to double, though, he said “that’ll be a different story.”

The Ethereum rigs that do stay online and switch to cloud computing or AI applications will still be consuming energy. So while the Merge will ease at least some of crypto’s strain on the grid and reduce the associated carbon pollution, “it’s not like things are going to change that much,” Webber said, from an overall energy use perspective. That points to the ever-present problem facing the grid and our energy mix: the need to rapidly transition from fossil fuels to renewables.

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