Somewhat buried in ethereum’s big software makeover that rolled out Thursday is a code update known as Ethereum Improvement Proposal 3554, or EIP-3554 for short. It threatens to hasten the end of ethereum mining as we know it.
Since its launch, the ethereum community has talked about overhauling the way that it mints ether, which is the token associated with the ethereum blockchain. But getting people to make the change is going to require a push – and that push is something known as a difficulty bomb.
“It’s a mechanism in ethereum that makes it exponentially harder to mine,” said Tim Beiko, the coordinator for ethereum’s protocol developers. “It’s like we’re artificially adding miners on the network, which raises the difficulty, making it harder for every other miner that’s on the network to actually mine a block.”
EIP-3554 moves up the detonation date of that difficulty bomb by six months to December. Once it goes off, it will essentially make ethereum unmineable.
Ethereum 2.0
Cryptocurrencies like ethereum and bitcoin regularly receive flack for the process of mining, which is how new coins are generated. Both currently use a so-called “proof-of-work” mining model, where machines solve complex math equations to create new coins. This makes it impossible for any centralized body to create new coins arbitrarily – there’s no equivalent of a central government to print new dollars – which crypto enthusiasts believe helps preserve the value of these cryptocurrencies.
However, this effort requires significant energy to power the computers used to perform the calculations, which has drawn criticism from outsiders concerned about energy shortages and carbon emissions.
The ethereum community has coalesced around the idea of migrating from proof-of-work to “proof-of-stake,” which requires users to leverage their existing cache of ether as a means to verify transactions and mint new tokens. This will still limit the amount of new coin created, but without requiring the energy used to run massive banks of computers to solve math equations.
Beiko tells CNBC the original proposal required these so-called validators to have 1,500 ether, a stake now worth around $4.2 million. To lower the barrier to entry, the new proof-of-stake proposal would only require interested users to have 32, or about $90,000.
“It’s still not a trivial sum, but it’s a much more accessible system,” said Beiko.
Since December 2020, the ethereum community has been testing out the proof-of-stake workflow on a chain called Beacon.
Though proof-of-stake has been the plan for ethereum since the outset, developers have pushed back the rollout, because they had seen serious flaws in previous implementations. Beacon solves these problems, according to Beiko.
“We knew that there would be a lot of technical work to address things like the increased centralization that we see in other proof-of stake-systems,” he said. “We’ve achieved that with the Beacon chain, where there’s one or two orders of magnitude more validators…than any other proof-of-stake networks.”
Migrating the entire ethereum ecosystem to Beacon, an upgrade being dubbed “ethereum 2.0,” is the next step in the process. Getting everyone on board with the move is where the difficulty bomb becomes significant.
The Ice Age
This isn’t the first time in ethereum’s history that a difficulty bomb has detonated.
It’s happened a few times, including in 2017, 2019, and again last year.
When a difficulty bomb detonates, it floods the system with artificial miners, driving up the mining difficulty. That means new blocks will appear more and more slowly on the network. “If you increase the difficulty really, really quickly, it’s just not profitable for new miners,” explained Beiko.
But each time it’s gone off, the community has reset the clock in order to bring the difficulty level back down to normal levels.
Etherscan.io
While you don’t need a bomb to go off to roll out proof-of-stake mining, it certainly helps move things along by closing the on-ramp to proof-of-work mining. Beiko calls it more of a stopgap measure.
In essence, the point of the difficulty bomb is to force miners and node operators to upgrade their software after a predetermined amount of time has passed, according to Nic Carter, Castle Island Ventures general partner and Coin Metrics co-founder.
In December, if the deadline for detonation isn’t pushed back, the bomb will go off, and you’ll see another parabolic rise in difficulty, like the ones pictured in the chart above. But this time, developers won’t be rewinding the clock.
It will be the start of ethereum’s proof-of-work “Ice Age.”
Not everyone’s happy
While the upgrade to ethereum 2.0 has a lot of backers, not everyone is happy about the change.
“There are some miners who are against it, but it’s in their financial interest to be against it,” said Beiko.
Once the protocol has fully migrated to a proof-of-stake model, there won’t be any revenue to be made from ethereum mining.
At that point, miners have a few options for what to do next.
There are a lot of other chains that support GPU-based mining, so miners could simply choose to start mining other cryptocurrencies.
They could also decide to just shut down mining operations entirely and sell their mining equipment. Beiko expects to see a lot of that.
“We’ve also seen many mining farms and mining pools on ethereum start to get into staking,” he said.
“We’ve seen mining pools use their profits to set up validators on ethereum. We’ve also seen them offer pooling services for their users who might not have 32 ether but still want to validate the network.” So even if you don’t have $90,000 parked in ether, you still might be able to keep some skin in the mining game.
White House Senior Advisor Elon Musk walks to the White House after landing in Marine One on the South Lawn with U.S. President Donald Trump (not pictured) on March 9, 2025 in Washington, DC.
Samuel Corum | Getty Images News | Getty Images
Tesla shares fell in premarket trade on Monday after CEO Elon Musk announced plans to form a new political party.
The stock was down 7.13% by 4:27 a.m. E.T.
Musk said over the weekend that the party would be called the “America Party” and could focus “on just 2 or 3 Senate seats and 8 to 10 House districts.” He suggested this would be “enough to serve as the deciding vote on contentious laws, ensuring that they serve the true will of the people.”
Now tech billionaire’s reinvolvement in the political arena is making investors nervous.
“Very simply Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take during this crucial period for the Tesla story,” Dan Ives, global head of technology research at Wedbush Securities, said in a note on Sunday.
“While the core Musk supporters will back Musk at every turn no matter what, there is broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track.”
Musk’s previous political foray earned him Trump’s praise in the early days, but he has since drawn the ire of the U.S. president.
The two have clashed over various areas of policy, including Trump’s spending bill which Musk has said would increase America’s debt burden. Musk has taken issue to particular cuts to tax credits and support for solar and wind energy and electric vehicles.
Trump on Sunday called Musk’s move to form a political party “ridiculous,” adding that the Tesla boss had gone “completely off the rails.”
Musk is contending with more than just political turmoil. Tesla reported a 14% year-on-year decline in car deliveries in the second quarter, missing expectations. The company is facing rising competition, especially in its key market, China.
Jonathan Ross, chief executive officer of Groq Inc., during the GenAI Summit in San Francisco, California, US, on Thursday, May 30, 2024.
David Paul | Bloomberg | Getty Images
Artificial intelligence semiconductor startup Groq announced Monday it has established its first data center in Europe as it steps up its international expansion.
Groq, which is backed by investment arms of Samsung and Cisco, said the data center will be located in Helsinki, Finland and is in partnership with Equinix.
Groq is looking to take advantage of rising demand for AI services in Europe following other U.S. firms which have also ramped up investment in the region. The Nordics in particular is a popular location for the data facilities as the region has easy access to renewable energy and cooler climates. Last month, Nvidia CEO Jensen Huang was in Europe and signed several infrastructure deals, including data centers.
Groq, which is valued at $2.8 billion, designs a chip that the company calls a language processing unit (LPU). It is designed for inferencing rather training. Inferencing is when a pre-trained AI model interprets live data to come up with a result, much like the answers that are produced by popular chatbots.
While Nvidia has a stranglehold on the chips required for training huge AI models with its graphics processing units (GPUs), there is a swathe of startups hoping to take a slice of the pie when it comes to inferencing. SambaNova; Ampere, a company SoftBank is in the process of purchasing; Cerebras and Fractile, are all looking to join the AI inference race.
European politicians have been pushing the notion of sovereign AI — where data centers must be located in the region. Data centers that are located closer to users also help improve the speed of services.
Global data center builder Equinix connects different cloud providers together, such as Amazon Web Services and Google Cloud, making it easier for businesses to have multiple vendors. Groq’s LPUs will be installed inside the Equinix data center allowing businesses to access Groq’s inference capabilities via Equinix.
Groq currently has data centers in the U.S. and Canada and Saudi Arabia with its technology.
Don’t miss Groq CEO Jonathan Ross on Squawk Box Europe at 7:45 a.m. London time.
Hidden among the majestic canyons of the Utah desert, about 7 miles from the nearest town, is a small research facility meant to prepare humans for life on Mars.
The Mars Society, a nonprofit organization that runs the Mars Desert Research Station, or MDRS, invited CNBC to shadow one of its analog crews on a recent mission.
“MDRS is the best analog astronaut environment,” said Urban Koi, who served as health and safety officer for Crew 315. “The terrain is extremely similar to the Mars terrain and the protocols, research, science and engineering that occurs here is very similar to what we would do if we were to travel to Mars.”
SpaceX CEO and Mars advocate Elon Musk has said his company can get humans to Mars as early as 2029.
The 5-person Crew 315 spent two weeks living at the research station following the same procedures that they would on Mars.
David Laude, who served as the crew’s commander, described a typical day.
“So we all gather around by 7 a.m. around a common table in the upper deck and we have breakfast,” he said. “Around 8:00 we have our first meeting of the day where we plan out the day. And then in the morning, we usually have an EVA of two or three people and usually another one in the afternoon.”
An EVA refers to extravehicular activity. In NASA speak, EVAs refer to spacewalks, when astronauts leave the pressurized space station and must wear spacesuits to survive in space.
“I think the most challenging thing about these analog missions is just getting into a rhythm. … Although here the risk is lower, on Mars performing those daily tasks are what keeps us alive,” said Michael Andrews, the engineer for Crew 315.