What is the Antminer E3? (Profitability April 2018)
On the 3rd April 2018, Bitmain released a new ASIC miner for Ethash, used by coins like Ethereum and Ethereum Classic. This miner is called the Antminer E3, and offers 180MH/s of hashpower at 800W.
This guide will go through risks associated with the Antminer E3, comparing it against current GPU mining hardware, and summarise a potential Ethereum hard-fork/change to proof-of-stake.
What is the Antminer E3?
The Antminer E3 is the first Ethereum-based ASIC miner. Prior to this, GPUs like the RX570 were the most cost effective way to mine Ethereum, offering 1MH/s at a cost of around $12. The E3 in comparison offers 1MH/s at $4.40, so it's around 2.27x more cost effective. Interestingly though it isn't more efficient in power usage, the RX570 and 1080 Ti GPUs are more power efficient, and the 1070Ti GPU uses the equivalent amount of power. So unlike the Antminer D3, A3 and X3, where these ASICs caused a massive increase in difficulty for the associated coins, the effect of the E3 on Ethereum won't be as significant (but there will likely be an increase in difficulty).
Now the release of the E3 isn't a surprise, there have been rumours about Ethereum ASICs being developed for several weeks, with 3 other companies expected to announce them over the coming months.
The first batch of E3's is scheduled for delivery by the 16th-31st July 2018. There's been a lot of speculation on if Ethereum will become resistant to ASICs, with no clear decision yet. If it does do keep in mind other coins like Ethereum Classic also use the same Ethash algorithm (and Ethereum Classic for example seems to be only 5% less profitable at the moment), so can be mined instead (this will be interesting as if say Ethereum becomes resistant and Ethereum Classic doesn't, miners may try and drive Ethereum Classic adoption, or vice versa). If all Ethash-based coins decide to be ASIC resistant and the E3 turns out to be limited to this algorithm, anyone owning an E3 would likely struggle to get their initial investment back. Because Ethereum has such a high market cap, this could have big implications for ASIC companies like Bitmain - where if ASIC resistance becomes the norm they'll start seeing less interest in their hardware.
Antminer E3 Profitability
At Ethereum's current price and difficulty at $0.10/kWh, the E3 offers around $2.5k per year. If you take into account price and difficulty changes, skeptically it would only return $232 over the next year, and optimistically $1087. So depending on your outlook of Ethereum long-term this may offer a return on investment after 8 or 9 months, or skeptically it might never. See our hardware mining calculator to see how we got these values.
GPU Mining vs the Antminer E3
We compare Ethereum mining using a GPU vs the Antminer E3 above, where certain GPUs are actually more efficient (so more cost effective long-term), but the E3 is most cost effective upfront. We'll now give some relevant background info around ASICs/GPUs for Ethereum.
So in general, there are two approaches to mining crypto. One is where you have an individual or small group buying a few miners maybe because they're curious or want to earn some extra money. In this scenario, factors like upfront cost and power efficiency are very important, and factors like how much space this mining rig takes up aren't so much, where it can just be put in a garage or shed. But other scenarios like larger-scale mining farms of 50 or more miners have other considerations, like space. Although GPU mining rigs are very efficient for mining Ethereum, they're also much larger. The Antminer E3 is several times smaller than a rig of 6 GPUs, where at scale this sould save a significant amount of space. The E3 is also less work to get runnining initially, and is around $1200+ cheaper than the equivalent GPU rig (with the E3 currently selling for $800, and a GPU rig $2000+). Factors like these make the E3 much more attractive to large-scale mining operations.
Interestingly though, Bitmain have said that each user can only buy one E3. In the past they said this for Siacoin too, but actually limited it to 3 per address (people got around this by delivering to different addresses). This may limit access large-scale operations have to the E3, although Bitmain may be selling directly to larger operations in private.
Long-term, GPUs are also more likely to hold their value, as gamers will still likely have a demand for them many years from now. Once a better ASIC comes along that's cheaper and more efficient than the E3, its resale price will decrease significantly. Although many people are speculating that the hardware components to the E3 are more similar to GPUs than previous ASICs, so with a software/firmware update it might be able to mine other coins, and at some point Bitmain might release a GPU of their own. If either of these are correct, the E3 would be much more reusable, and so have a higher resale value.
Ethereum was originally designed to be ASIC resistant
With Monero recently announcing that it will become resistant to ASICs in an upcoming hard-fork, many people are wondering if Ethereum will do the same thing.
A section of Ethereum's whitepaper has people very curious, where it states that it's resistant to ASICs by design. A short summary: "If the problem requires memory as well as CPU, the ideal hardware is in fact the general computer. This makes Ethereum's Proof of Work ASIC-resistant, allowing a more decentralized distribution of security than blockchains whose mining is dominated by specialized hardware, like Bitcoin."
And until now, this has been true. Unlike Bitcoin which has had ASIC miners built around it for many years, Ethereum hasn't. The Antminer E3 seems to be the first, so many are arguing that Ethereum doesn't need to do anything, it's already achieved that goal. Others are claiming it should have a fork where the mining is changed to deter the E3, where there's an expectation that Etherem's developers knew this would eventually happen and so should have a secondary mining algorithm ready just in-case (although depending on the hardware design of the E3, it may be able to adapt to algorithm changes better than Bitcoin-based ASICs if it uses GPU hardware, and so more difficult to deter; firmware may limit this though).
Ethereum changing to proof-of-stake
We've seen many people keen for Ethereum to change it's proof-of-work algorithm to be ASIC resistant, but not many people talking about Ethereum changing to proof-of-stake. Ethereum's Vitalik Buterin and Virgil Griffith have introduced a hybrid proof-of-work/proof-of-work system called Casper, which would potentially lead to Ethereum becoming fully proof-of-stake based, where it you wouldn't be able to mine it fullstop.
The real question is when this will be implemented, as ASICs are going to become a problem in several months, but Casper may not be implemented until months or even years after that - so a short-term solution may be needed (although because the E3 isn't drastically more efficient than existing GPUs this may not even be necessary).
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