The Canadian miner recently purchased $30 million worth of Nvidia’s crypto-focused graphics cards (GPUs) to mine Ethereum and other cryptocurrencies. Hut 8’s Cryptocurrency Mining Processors (CMPs, as Nvidia has branded them), will utilize Luxor’s Switch software to flip between Ethereum and other coins that use the SHA-256 hashing algorithm (same that’s used for Bitcoin).
Hut 8 will host the hardware themselves but will rely on Luxor for software and hashrate management, per the agreement.
“Institutional miners are looking for profit-switching algorithms to access deeper hashrate liquidity and get best point-in-time execution for their hashrate. Leveraging multiple blockchains, venues and MEV opportunities, Luxor Switch can deliver top miners, such as Hut 8 with extra return for their hashrate,” Luxor CFO Ethan Vera told CoinDesk.
Ethereum’s DeFi summer of 2020 and NFT spring of 2021 have been boons for miners, as transaction fees on the network ballooned alongside token valuations.
Developers recently approved an Ethereum Improvement Proposal for activation this July which would burn ETH transaction fees, a change that has been met with celebration from ETH users and exasperation from miners.
Even with some of their rewards capped by EIP 1559 and Ethereum migrating to proof of stake, miners are still putting money into their Ethereum mining infrastructure. Companies like Hut 8 expect the investment will pay off in the time it takes Ethereum to make the upgrade–and that it will probably pay some more after that.
“Companies mining Ethereum are betting they will be able to get a return well ahead of a full-switch,” Vera told CoinDesk.
Some miners believe that Ethereum 1.0, the current network which runs on proof-of-work, will last a few years still even after Ethereum 2.0’s launch, Vera continued.