Mining is the fundamental native business of proof-of-work (PoW) blockchains. Miners provide computational power to the blockchain through their hash rate, ensuring each block is stamped at a very high cost. This stamp is the sole piece of information all nodes and other miners in the system need to know to confirm the correct block in each round in a completely decentralized manner.
This system has been running continuously on Bitcoin (BTC) for 15 years and on Ethereum Classic (ETC) for 9 years. The incentive for miners to dedicate their machines to blockchains like ETC is the block reward. These rewards consist of payment per block in the form of newly created ETC, plus all the fees from transactions included in each block.
The reason you should mine ETC is the profit opportunity it represents. Indeed, ETC is set to generate substantial revenue in the coming years, and those who mine it will benefit from its success and growth.
The Core Value Proposition of ETC Mining
ETC offers a unique value proposition in the cryptocurrency mining landscape. Its fixed monetary policy and established history provide a predictable and potentially lucrative environment for miners. The following sections break down the key metrics that quantify the total available market for ETC miners, excluding transaction fees, which are also expected to be significant.
Supply Cap
A defining feature of Bitcoin is its fixed supply, set from the very beginning. The system started in 2009 by paying 50 BTC per block and halves this payment every 210,000 blocks. Through calculation, it can be deduced that Bitcoin will reach its supply cap of 21,000,000 BTC around the 2130s.
Ethereum Classic adopted a similar monetary policy in 2017. ETC started by paying 5 ETC per block and has since reduced this reward by 20% every 5,000,000 blocks. Calculations show that Ethereum Classic will reach a supply cap of 210,700,000 ETC around the same time as Bitcoin. This fixed supply cap positions ETC as digital gold, making the mining of this digital asset a crucial business for miners.
ETC Already Issued
When Ethereum and Ethereum Classic were a single blockchain in 2015, a pre-mine of 72,009,990 coins was created at the network's launch. This was the initial inventory of ETC issued before the blockchain began its operational phase.
At the time of writing, the network is at block 20,081,198, and the total supply of ETC is approaching 147.5 million, precisely 147,494,079.63 ETC. This inventory consists of the following components:
- Pre-mine: 72,009,990 ETC
- Block rewards: 73,966,294 ETC
- Uncle blocks: 1,517,796 ETC
Uncle blocks represent a small amount of issuance paid to miners who occasionally generate valid blocks simultaneously but are not included in the canonical chain. The metric of already issued ETC is significant for calculating the remaining ETC left to be mined.
Remaining ETC
The remaining ETC metric is crucial for miners as it quantifies the business's total available market. This is calculated by subtracting the number of already issued ETC from the supply cap figure.
If ETC's total supply is 210.7 million, subtracting the total issued inventory of 147.5 million leaves us with the ETC remaining for the future. This figure is approximately 63.2 million ETC.
However, the remaining ETC is not evenly distributed across all years until the 2130s. Due to the decreasing monetary policy, roughly 50% of the remaining ETC will be paid to miners within the next decade. This represents a massive opportunity for those who participate in the network's security now.
Future Revenue
If we multiply the remaining ETC by the average price of ETC over the past few weeks, we arrive at a dollar figure of approximately $1.7 billion. This means that, all else being equal, ETC miners are poised to earn $1.7 billion, with 50% of that being earned in the next 10 years.
However, miners must consider two additional aspects. First, ETC is a blockchain with potential for continued growth, meaning the price of ETC could increase, making these revenue estimates conservative. Second, by mining ETC, miners can accumulate ETC as a reserve, which will likely prove to be a great investment in the future.
Getting Started with ETC Mining
To begin your journey as an ETC miner, you will need to acquire specialized computers known as ASICs (Application-Specific Integrated Circuits). These devices are designed specifically for the hashing algorithm used by Ethereum Classic, providing the efficiency necessary for profitable operation.
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Connecting to a Mining Pool
Once you have your mining hardware, the next step is to connect your machines to a mining pool. Mining pools allow individual miners to combine their computational resources to increase their chances of successfully mining a block and earning a reward. Rewards are then distributed among pool participants based on the amount of hash power they contributed.
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Frequently Asked Questions
What is the difference between Ethereum (ETH) and Ethereum Classic (ETC)?
Ethereum Classic is the original Ethereum blockchain that continued after a contentious hard fork in 2016. ETC maintained the principle of "code is law," while the forked chain continued as Ethereum (ETH), which later transitioned to proof-of-stake.
Is ETC mining still profitable?
Profitability depends on several factors, including the cost of electricity, the efficiency of your mining hardware, and the current market price of ETC. It requires careful calculation, but the fixed supply and potential for price appreciation present a compelling case.
What is the Ethash algorithm?
Ethereum Classic uses the Ethash mining algorithm, which is a memory-hard algorithm. This means mining efficiency is dependent on having a sufficient amount of memory, which helps to level the playing field and resist dominance by specialized ASICs, though ASICs for Ethash do exist.
How do I calculate my potential mining profitability?
You can use online mining profitability calculators. You will need to input your hardware's hash rate, its power consumption, your electricity cost, and the current network difficulty and ETC price to get an estimate.
What are uncle blocks?
Uncle blocks are valid blocks that are not included in the main chain. Miners of these blocks receive a smaller reward than for a full block. This mechanism helps to improve network security and miner incentivization.
Can I mine ETC with a GPU?
While it was historically possible to mine ETC with GPUs, the network difficulty and the development of efficient ASICs have made GPU mining largely unprofitable for Ethereum Classic.