Ethereum mining rewards set to drop by 80%
The hybrid first stage of Ethereum's switch to proof of stake will see mining rewards drop by 80%.
Ethereum has published the proposed specifications for stage one of its switch from proof of work (PoW) to proof of stake (PoS). Stage one is a hybrid PoW/PoS system, designed to wean miners off the system and give some of it over to the "Casper" PoS system instead.
"In this proposed spec for stage 1 Casper, Ethereum will transition from pure proof of work to hybrid PoW/PoS. In this scheme, all of the proof of work mechanics will continue to exist albeit with a reduced block reward (0.6 ETH), but additional proof of stake mechanisms will be added. In particular, the fork choice rule (ie. the way that a client determines which chain is "the canonical chain") will be modified to take these mechanics into account," it reads.
0.6ETH block rewards are a sharp 80% drop from the previous 3ETH block rewards, and once the full proof of stake switch is implemented the mining reward is intended to eventually drop to zero, to prevent an unwanted fork caused by miners splitting off to go their own way.
There's no hard timeline on the changes yet, but it might not be too far away. Rumours are circulating of a new Bitmain Ethash ASIC miner and some community members have already proposed a hard fork to prevent ASIC miners from accruing too much hashing power on the network and inadvertently centralising it. It seems to be a popular proposal, with yes votes outnumbering the no votes more than twenty-fold at the time of writing.
A sharply reduced block reward would strongly discourage miners from spending money on Ethash ASIC mining gear, and the impending switch to PoS alone might also be enough to prevent it from becoming an issue.
Monero has found itself in the same position, and is similarly planning a hard fork to prevent ASIC miners from getting too much hashing power.
To "mine" Ethereum after the shift to Casper PoS, one simply needs to hold enough Ether in a suitable wallet. The final implementation is probably still many months away, but a date for the reduced block rewards in phase 1 might be announced soon.
Ethereum founder Vitalik Buterin has tentatively estimated late 2018 for the switch, and even though it's probably moving as quickly as is safely possible, the news of ASIC mining might prompt an accelerated development timeline.
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VEN, XLM, BTC, NANO