hey everyone and welcome back to another mining
chamber video in today's video we are going to talk about eip 1559 so we're going to discuss what
it means for miners what it means for investors why are there so much drama about this topic
and then i'm going to talk about the latest call from the old core dev team where they
listened to the proposal from bitsby trippin which is the eip3368 now let's go ahead
and get into this right after the intro so first let's talk about eip 1559 and how it
came to be in what it actually does to miners as well as the coin itself now if you don't know what
eip means it means ethereum improvement proposal and there are many of these eips and each one
is basically trying to improve a certain aspect of ethereum as a whole so now in this video
we are going to be focusing on the 1559 one where it was authored by vitalik and if you don't
know who vitalik is which is very unlikely he is the co-founder of ethereum and he was the one
that basically proposed this eip now this eip was created on april 2019 now the dates will hold
some importance because when this eip was proposed the mining game wasn't the same at all the profits
were definitely a lot different and the difficulty was different as well so the simple summary of
eip1559 is that it basically burns the transaction fees rather than giving them to the miners so from
a perspective of a user or a trader of ethereum a lot of people have the misconception that it
will reduce the prices of gas fees now it will not necessarily reduce the price of gas fees
but instead it will make them more predictable so meaning that when you go in your wallet and you
try to send a transaction you won't have to think about your gas fee the waltz will have the ability
to automatically set your gas fee without you having to set it yourself and that is one of the
benefits of vip 1559 for investors and traders and then one other thing that's possibly beneficial
for the network and that is to try to be as deflationary as possible so that means is that
every 15 seconds a block is solved and that block will introduce two new ethereum to the network
now this is a fixed number so it doesn't change and the idea with introducing eip 1559 it will
burn the transaction fees in hopes of fighting the inflation of ethereum so rather than always
increasing the circulating supply by 2 ethereum they also want to burn out as much as they can so
that they can basically give it a type of scarcity but it won't always be deflationary because
sometimes you'll have less transaction fees and a block than the base reward so in some scenarios
you will introduce one ethereum maybe less than one ethereum or they will be burning more than
two ethereum which will even cover the base reward and now for the miners side of things we do
benefit from everything that i've mentioned before about traders and investors i think one
other misconception is that miners just sell their crypto right away and that's not the case
with a lot of people i myself hold it usually most of the time and i don't sell my crypto unless i
have to pay some utility bills for the mining rigs so that means as a miner you'll benefit from
more predictable transaction fees and all this other good stuff that we talked about now the one
thing that comes in the way for miners is burning the transaction fees rather than giving them to
miners as we all know the mining profits have been skyrocketing lately and it's bringing in a
lot more new users and miners to the community especially for us miners making our investment
worth the while now a lot of the miners that have been in this field for a while know that
the mining profits were never that high and they usually are a lot lower than this so when we
look back at 2019 ethereum was around 200 at most you'll probably see three ethereum per block and
at some scenarios you will see high blocked awards but it's never in the same scale that we're in
right now now what's so important about block rewards it's basically what's going to change
in this eip so the block rewards are divided by two different things first you have your base
reward which is two ethereum and then you have your transaction fees so the transaction fees add
up to the base reward and then that is distributed to the miners for securing the blockchain once
eip1559 is implemented those additional rewards above the two ethereum will be burnt rather
than given to miners so for example if you have a block reward of four ethereum only two of
them will be given to the miners which causes a 50 loss in profits now we do see a lot bigger block
rewards so you can expect more than 50 profit loss but there are two new things that came to light
with this eip so the first thing you have is inclusion fees the best way to explain inclusion
fees is by telling you about the transaction fee so the transaction fee will be divided into two
different fees and the first one will be the base fee and the second part will be the inclusion fee
so now the base p will be the one that's burnt and that's usually the bigger sum of the transaction
fee and the inclusion fee will be the tip to the miners so even though this is an incentive to
miners it really won't be a big percentage it will probably be less than 10 of the transaction
fee so you can't really expect much from having the inclusion fee as an incentive now in some
scenarios you will see some really high block rewards due to the inclusion fee so for example
if the average blocked reward is for ethereum and then out of nowhere a block with more than
four ethereum comes on the network and by more i mean like a lot more ethereum then that is most
likely from inclusion fees of two people trying to be to a higher position on the block so the
inclusion fee is like paying more to be the first in the block now in a way this is similar to how
we have it now people that want the transaction to be sent first they will have to pay more fees
for them to go first in the block now instead of it being the full miner transaction fee will be
the inclusion fee what sets you apart from the other transaction your base fee will remain
the same based on the volume of transactions if the volume of transactions is high then your
base fee will get higher but if it's not high then your base fee is lower now as far as i know it's
a fixed number for the base fee but don't quote me on that there are many videos out there that
explain it way better so i highly suggest watching them now other than the inclusion fee there's
another hot topic which is about mev which is minor extracted value now minor extracted value
is outside of the hands of the individual miners that mine to a pool like the majority of us and
we all mine towards different pools for example ethermine flexpool and all these other pools now
mev needs to be set up through the pool side and how mav works it's basically an entity paying the
pool to reorganize the block of transactions based on whichever way they want it to be and like that
they can get an advantage in arbitrage or trading in general and putting their transactions first
mev topic is honestly very confusing it took me a while to understand it so i might still have
it wrong here and if i do please clarify in the comments below there is one video that i highly
recommend watching about mev and it's on bitsby tripping channel where he did a call with micah
and micah went through explaining mev in details now i watched that video i still didn't grasp it
fully but if you watch it you might understand it much better than i did so in a nutshell for us
miners we're going to experience some profit loss and it might be a big amount of profit loss but we
won't know until the time comes for this eip to be implemented so to visualize the profits let's say
you have 500 mega hash and then the block reward is at average for ethereum and then we're going to
be putting electricity price of 5 cents for now so with these numbers with how currently we have it
now the profits are not bad at all so you'll be making around a thousand six hundred dollars
right after electricity with the super cheap electric rate so now fast forward to july when the
adjustment happened so we put the block reward to ethereum and then you'll notice your profits
have dropped by half so you'll be making 770 dollars from 500 megahash rather than the higher
amount that we had earlier and if your elixir city rate is higher so let's say you live in germany
and you have a really high electric rate so 30 cents per kilowatt hour then you'll be making 500
after the electricity so that is all the ethereum current price which is at 1838 now if ethereum
drops in price you can expect your profits to go very low if it goes below a thousand dollars then
the profits will be way less so you might not be profitable anymore in mining so all we can hope
for is that ethereum would not drop down too much because if that happens then we can expect the
network will be centralized with only asics that are super efficient and then most of the home
gpu miners will not be able to mine properly so now we can go ahead and move on to the
timeline so for the timeline i'm going to try to be going through a lot of events that
happen which led up to where we are right now and all these links will be in the descriptions
below so if you guys don't find any of the links please let me know i'll try to add them or just
look up the name and then you will find it and if i do miss any events please let me know in the
comments below as well i'm going to try to cover it as much as i can so you guys can understand
the timeline of this problem which will give you context for the drama that's been happening so
the first thing is we have had a community call on bitsby tripping channel where he invited over
multiple cryptocurrency mining channels and then we just talked over the problem and everything
that's going on so this is one of the first calls and then after that call there was another call
with the ethereum cat herders community call and here they talked about the problem there was
a couple of core devs in here and then they discussed the eip 1559 problem with chris from
flexpool as well as carter from bitsbytrippin now the general feel of this call is that they didn't
really take anything serious from what carter is saying like they didn't see the problems that
potentially can happen due to eip1559 some of the people in the community did and they did listen
well and all around it was a good call it just didn't get the miners point across and then we've
had another community call on bitsby tripping channel it was also streamed on different channels
as well now in this call we just reflected on the community call from the ethereum cat herders and
we just gave our opinions toward this situation there's a lot of information in these calls so i
highly suggest watching them if you haven't yet if you find that the audio is a little bit choppy
or it's echoey then you can find it on a different channel and then i'm sure you'll be good to go now
after this community call we've had another call about miners extracted value and in this minor
extracted value it was mainly a discussion with micah where he explained what mev is and he went
into details about it so if you don't know what mav is or i didn't do a good job explaining it i
highly recommend watching this video and then we have one of the ethereum core devs meeting call
where they talked a little bit about the eip1559 so you guys can find the pinned comment that will
take you exactly to that section of the video now from that video they talked about a little bit of
concerns but in general it seemed like they didn't really care about what will happen to miners
regarding to eip1559 so now after this call that's where samwori came across the mining community
which then resulted into this tweet from red panda mining now if you guys don't know who red panda
mining is he posts videos daily on cryptocurrency mining and he is very involved with the community
and i highly recommend checking him out if you're not following him on youtube and twitter so
the tweet that he posted reads as follows for educational purposes let's collectively move our
hash to ethermine.org april 1st for 51 hours now this tweet went viral and a lot of media twisted
his words and made it seem like he's trying to attack ethereum but knowing how red panda mining
is he's a very sincere guy and this tweet came out of good intentions and not bad intentions the
main reason for this suite was to show them the potential risks of dropping the profits so hard
that it can leave a lot of hash rate around that can go anywhere from nicehash to different coins
which end results leaves ethereum vulnerable so i will address all the drama that happened after
the suite which is a lot of different articles that just wrote about the miners as they are
trying to attack ethereum and all that stuff which we will talk about right after the timeline
so now going back to the tweet after this happened a lot of other cryptocurrency mining channels they
followed through and we're all planning on putting our hashrate in ethermine.org but then after
a short while bitsbytrippin proposed a new eip now if you guys don't know who bitsby trippin
is as well you definitely should subscribe to him and check out his content he is spending a
lot of time and effort trying to help us as a community and the least that we can do for him is
have his voice heard so what bitsby trippin did after a short while from red panda's mining tweet
he proposed this new eip which is three three six eight now the main purpose of this eip is to
increase the block reward by one ethereum so rather than having two ethereum base reward
it will be three ethereum and then it will decay every quarter until it reaches one ethereum
after two years which leaves ethereum at a good position to switch to a proof of stake because
like that it gives every miner enough time to prepare themselves and decide what they're going
to do with their hashrate rather than putting them in a spot that have to drop a lot of hatch rate or
move it around suddenly now just to be clear that this eip is supposed to be implemented
additionally with eip-1559 it's not one or the other it's both of them together i highly
suggest checking out carter's work on it he made a couple of videos on it as well as an article
and i will leave those in the descriptions below just go to his channel and then you'll see here a
deep dive in eip 3368 and all the models that he built around it a lot of very valuable information
that you guys should definitely check out so now after the eip 3368 is proposed red panda mining
retweeted again and he said he is rescinding from the show of force on ethermine.org so that means
we're not going to plan on putting our hashrate on ethermine.org anymore and if you're just mining
there you can definitely be mining there it's not an issue at all and the reason he's rescinding
is because we finally have our voice heard so as you can see here tim from the core devs
as well he tweeted that he saw the eip 3368 and they will be listening to it at the next all-core
devs meeting which is great for us miners this is really good news and having at least a chance to
propose a new suggestion that can fix this problem it's great so now that we covered the timeline
and we're just waiting until the meeting happens so the meeting has already happened and i
thought it wouldn't happen yet until next week from posting this video but i was wrong so i
had to re-edit a couple of things for this video so we can be up to date with what's going on
so now if you guys watch the core devs meeting where they talked about the eip 3368 and a couple
of other things eip 3368 got rejected from being included with the eip 1559 on july so we won't
be expecting that increase in block reward now that's some bad news but at the same time it's
not so bad because the main goal for bit speed tripping is to say that eip 3368 is an option
especially if the price of ethereum drops and it causes a lot of shortage in the profits for
miners which will end up making the miners leave the network so eip3368 is not fully out of the
table yet but eventually they might apply it if the profits of ethereum drop really hard so what
we said now we are going to be expecting in july the profit job for ethereum miners now i don't
know exactly what date but when it happens i'll try to make an update video on it and if you
guys want to know what's my course of action i will be covering that right after the drama
now we can move on to the drama so the drama all started after red panda mining tweet now red
panda mining didn't purposely start the drama but there's a lot of media outlets that twisted his
words and made it seem like miners are trying to attack ethereum which is very unreasonable now
there is no reason that miners need to attack ethereum because first that doesn't help us
that actually makes us lose money and a lot of us miners hold a lot of ethereum so there is
no reason to take ethereum down just because of the mining profits the one thing that they seem to
have a blind eye on the main reason for this tweet is to show that there's a potential of opening
a door for a 51 attack with this new eip 1559 that they are trying to implement as bitsby
tripping states in the eip 3368 a sudden drop in the proof-of-work mining rewards could result
in a sudden decrease in mining profitability which will drive miners to auction off their hash
rate to the highest bidder and then that can open doors for bad things so rather than dropping
the mining profits really hard eip3368 will try to mitigate that issue and balance it out now
if we take a look at a couple of the articles here are some ones that i was able to find
just from searching eip1559 and then miners so you can find here ethereum miners threaten to
strike ahead of eip 1559 and all this unnecessary stuff that's going on in the media just causing
additional drama for no reason at all putting our hatch rate on ethermind.org that doesn't
mean ethermine.org is going to plan a 51 attack on ethereum ethermine.org is not a bad actor in
this field so us miners doing it for educational purposes that doesn't mean miners are trying to
attack ethereum i'm not sure how they got that out of it but that seems to be the general idea of the
media so anyways in general for all the media it's all seemed to be just way too negative towards
miners now i honestly personally don't care i feel like it's very dumb to try to separate miners
from investors and traders we're all the same just miners choose to invest in hardware which in
return makes them crypto and then investors that buy the cryptocurrency just buy the cryptocurrency
directly now that doesn't make us any different we just buy it through a different means and we
still accumulate crypto at the end of the day now after all these articles that are spelling
too much nonsense there are a couple of youtube channels as well that talked against miners for
example bitboy crypto he did talk badly towards miners but you can't blame the guy now i first
want to say i don't condone any hate so you guys shouldn't go to any media outlet or any youtuber
or any content creator and show them any hate so bitboy crypto he's a big channel and he has really
awesome content so i have nothing against this guy he also made a video on september 20 where he
interviewed seth estrada from minor biz and it was a really wholesome interview about mining so
what i'm trying to get to is that bitboy crypto does not have any evil intentions towards miners i
mean i could be wrong but this is just my opinion at least i would hope that it's that way and
it's just that we need to clear out the ignorance that's going on that miners are out there to
get them and all that stuff now to wrap up the drama if you're a user in the ethereum community
and you have a negative perspective on minors i ask you to read more than just the headlines
of an article or two you don't need to separate yourself from the miners because at the end of
the day we are all what keeps ethereum thriving whether you're a miner investor or a trader due to
all the drama as well vitalik came out and he said he's going to try to merge proof of stake as soon
as possible now i honestly think that's a bad idea especially rushing something like that first it's
not going to reduce any gas fees and it's just to put it in the face of miners and that is it for
the drama now as for what i'm going to be doing i'm honestly not going to be stopping mining
anytime soon i'll probably be buying more gpus but specifically nvidia cards not amd because amd
cards don't do that well on other algorithms so it's better to stay safe and just get nvidia and
if the mining profits on ethereum drop drastically that it's not profitable for me to mine anymore
then i'll probably be switching to a different coin and then just collect that and either sell
it and buy ethereum or just collect that other coin now this is not a financial advice it's just
what i'm going to be doing so now that wraps up the video guys i first want to say sorry that
this video took a really long time to publish i had to film it a couple of times because i keep
learning new things and i want to make sure that i give you guys the most accurate and up-to-date
information and i also want to give a huge thanks to the community and all the content creators
that made making this video a lot simpler you guys put on some phenomenal information out there
and it helped a lot so after this eip 1559 miners perspective the next goal will be making a video
on ethereum 2.0 a look in the future so make sure that you stay tuned for that now i also want to
thank you guys for almost reaching the channel to 50 000 subscribers that is crazy and i'm planning
on a big giveaway on 50 000 subscribers so make sure that you subscribe if you're not subscribed
yet so you can join the giveaway now that wraps up the video if you guys enjoyed the video please
leave a thumbs up and if you have any questions please leave them in the comments below thank you
guys again and i hope you have a wonderful day you
