Ethereum's hashrate —a measure of the computational power devoted to the cryptocurrency—has reached an all-time high, despite the London hard fork that was expected to push miners away from the platform by greatly reducing their profits.
CoinDesk today reported that both Etherscan and OKLink show Ethereum's hashrate peaking over the weekend. The platforms disagree on the specifics, with Etherscan putting the hashrate at 715.4 terahashes per second (TH/s) and OKLink putting it at 663.6 TH/s, but they both say their respective measurements are new records.
The increasing amount of computational power devoted to Ethereum does come as a bit of a surprise. London intentionally limited cryptocurrency miners' ability to make a profit, by permanently destroying an algorithmically determined base fee associated with processing a transaction, instead of giving that fee to the miners.
That was a costly decision for the Ethereum network: Approximately $12,000 worth of ETH was being destroyed every single minute in late August. A Dune Analytics dashboard tracking that burn says that 285,439 ETH worth approximately $970 million has been destroyed since the London hard fork was introduced.
Ethereum's also set to change to a proof-of-stake model that obviates miners entirely with the introduction of Ethereum 2.0 in the not-too-distant future. So why are miners continuing to devote more and more power to Ethereum despite the network making it very clear they're running on borrowed time?
OKLink senior researcher Eddie Wang told CoinDesk it's because "high demand on the network, such as NFT minting with high priority fees, has kept miners’ revenue up." That's right: The rise of non-fungible tokens (NFTs) could be helping Ethereum miners deal with the decreased profitability that was supposed to follow London.
Despite their digital nature, NFTs can't just be created like a standard file. Instead they're "minted" on the Ethereum blockchain, which allows them to be tracked and traded just like the ETH cryptocurrency, but with a nifty piece of digital art as well. (A step-by-step guide to minting an NFT can be found on the Ethereum.org website.)
All of this means one explanation for Ethereum's record-high hashrate is the fact that NFT creators need miners to help them mint digital art that can fetch absurd prices from collectors, despite the mostly theoretical application of "ownership" they impart. Nobody tell The New York Times that's where all this energy's going.