On Sunday, Ethereum ETH/USD miner revenue fell to a 5-year low of under $23,600, the last 5-year low was under $47,150 on December 25, 2019. 2Miners’ Ethereum hashrate chart shows that today the network also saw a hashrate all-time high of 1.09 petahashes per second.
What Happened: Glassnode Alerts, the Twitter profile sharing on-chain trends of blockchain data firm Glassnode, showed the record in a Monday tweet. As pointed out in a separate tweet sent on the same day, the drop in miner revenue coincides with Ethereum’s mining difficulty reaching a new all-time high of 14.609 quadrillions, with the last all-time high of 14.588 quadrillions reported on May 3, 2022.
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The increase in mining difficulty erodes miner revenue by making the creation of blocks harder, and it has two separate causes. One is the increase in network hashrate which results in the network’s software increasing the mining difficulty to keep block time stable, the second reason is Ethereum’s so-called “difficulty bomb” which is structured to cause an “ice age.”
Ethereum’s difficulty bomb is an increase in difficulty programmed in the network’s software meant to increase the difficulty with time until it becomes unprofitable to mine and comes to a halt, often called the ice age.
This self-destruction mechanism is meant to ensure that after Ethereum transitions to proof-of-stake, its original proof-of-work blockchain is abandoned and all activity moves onto the new blockchain. Of course, this transition was delayed multiple times and developers were forced to issue updates delaying the ice age more than once in the past.