How Ethereum London Affects Mining

The upcoming Ethereum London update introduces the foundation for the move to Ethereum 2.0 . This new Ethereum London update above all is a warning to those who are engaged in Ethereum mining , indicating that they are beginning to be unnecessary.

Index of contents

  • What is Ethereum 2.0
  • What is Ethereum London
    • EIP-1559
    • EIP-3198
    • EIP-3259
    • EIP-3554
  • How Ethereum London Affects Mining
  • How Ethereum London Affects Fees
  • What will happen to supply after Ethereum London
  • When will Ethereum London go live
  • Final words on Ethereum London

What is Ethereum 2.0

It is a radical change in the way the blockchain works and its consensus. Be stable in Ethereum 2.0 that the blockchain can be divided into smaller and more manageable sections , all managed by a large blockchain that will act as a divided entity that watches over everything. Additionally, the consensus is modified, moving from the proof of work to the proof of participation. Switching to this model makes the process of validating transactions and generating blocks much simpler and more efficient, requiring, according to estimates, 95% less energy.

It therefore supposes that mining as we know it will cease to exist, good news for gamers, who will stop having problems buying graphics cards. But at the same time the community fears that changing to proof of participation will generate centralization. One of the strengths of the Ethereum proof of work is that you buy a chart, download the software, and start mining for Ether. The problem with proof of stake is that you need 32 Ether to become a validator node.

But, it is necessary that Ethereum can support more than 20 transactions per second, current limit of supported transactions with proof of work. Network congestions occur with increasing frequency , as Ethereum is used more and more for more things. We understand network congestion when more transactions enter over a long period of time than the network is capable of processing. When network congestion occurs , what happens is that the commission cost of a transaction tends to skyrocket .

Due to the growth of NFTs and DeFi , periods of network congestion are increasing. In addition, the smart contracts necessary for both elements are very expensive to use, making DeFi unfeasible above all at an economic level.

What is Ethereum London

This update serves to build the foundations for the Ethereum 2.0 update that will take place in 2022. Although EIP-1559 is often highlighted , this update actually includes several improvement proposals. Let’s see what elements are included in Ethereum London:


Add a base fee for each transaction on the blockchain. This generates an effect of reduction of the general costs of the transaction thanks to the fact that it allows to better estimate the commission of the transaction. Ethereum is currently based on a live auction system that can cause us to overpay. We must bear in mind that the commission reduction would be 20% in the best of cases.

The omission will no longer go to the miner, but will be burned . This causes money to begin to decline , moving to a deflationary mechanism in the network. Likewise, the price of Ether could rise due to the shortage.


It is a kind of adaptation of the EIP-1559 focused on smart contracs. With this update, the aim is to make the use of smart contracts more economical. Add an element that will ensure that when a smart contract is used they should not pay an excess of commissions.


It could have more or less the same impact as EIP-1559. This improvement proposal allows you to eliminate refunds for certain operation codes . Currently you can get a refund of the gas paid for the transaction when the network is cleaned.

We understand by cleaning the network in relation to eliminating data that may obstruct the proper functioning of the network. But what many do is when the commissions are low, they fill the network with “junk” and when the commissions are high they dedicate themselves to erase that “junk” data and recover the refunds. The update removes or reduces these refunds.


It introduces a delay in the implementation of the “difficulty bomb” that is delayed until December 2021. What this element does is increase the difficulty of solving cryptographic problems. Come on, the difficulty of mining Ethereum is increased. The problem is that this element will cause the network to become extremely slow.

The “difficulty bomb” is an element developed to discourage Ethereum mining. It is sought with this element that miners change their inefficient hardware for a more efficient system and the stacking of 32 ether. Come on, that the “difficulty bomb” is an element that encourages going from the proof of work to the proof of stake of Ethereum 2.0.

Simply this EIP-3554 what it does is delay the update to give developers time to finish the updates for Ethereum 2.0.

How Ethereum London Affects Mining

It affects Ethereum mining in two points. The first point in which it affects is in a reduction of the benefits for the validation of the transactions and the generation of the blocks. The second point is the delay of the «difficulty bomb» which allows you to continue mining without major problems.

Especially Ethereum London affects mining immediately, since part of the base commission of the transactions is burned . This makes the process of transaction validation and block generation much less profitable than before. Specifically, it is estimated that miners could have a loss of 20-35% with respect to normal income . The operation of the network does not really change, as the prevailing consensus on the Ethereum blockchain is proof of work.

Now that we know the bad part that Ethereum London introduces, let’s go to the positive part. EIP-3554 is introduced and delays the “difficulty bomb” until December , so the probability of reward per block is maintained. If it were introduced, it would be more difficult to generate blocks and process transactions, further reducing profitability.

How Ethereum London Affects Fees

All transactions made in Ethereum (and other cryptocurrencies) have a commission associated with them. The commission to date was allocated entirely to the reward of the miners who helped generate. These commissions have a fixed part called “base commission” to which an extra is added if we want the transaction to be validated before. Now the “base commission” will no longer go to the miner, it will be sent to an unusable Ethereum address (the commissions sent there can never be used).

EIP-1559, which adds this element, means that commissions can be reduced by up to 20%. Additionally, it implements a change in the calculation of the commission per transaction. A kind of congestion switch is added that causes the “base commission” to not go up more than 12.5% ​​between blocks. This will prevent commissions from going through the roof at a time when the network registers more transactions than their processing capacity.

Those users who want to can add a small reward for miners to the “base commission”. This extra will not be mandatory, but if we want our transaction to be validated quickly, it may be necessary.

What will happen to supply after Ethereum London

Currently the Ethereum blockchain establishes that with each new block generated 2 ether are added to the circulating. Ethereum does not have a maximum amount of circulating cryptocurrencies, something that significantly differentiates it from Bitcoin, which sets a limit of 21 million bitcoins.

What the Ethereum London update does is burn the “base commissions” . Theoretically, what this mechanism does is make Ethereum become a deflationary system. This means that the current amount introduced is greatly reduced and in some cases it can be negative. Come on, it could be the case that the sum of the «base commissions» is higher than the 2 ether that are added per block.

This mechanism is generating some controversy, as it is seen as an attempt at price manipulation to the upside . Generating a shortage causes the price to rise. I don’t like this update because in theory Ethereum has no limit to avoid being a deflationary cryptocurrency like Bitcoin or Litecoin.

We have to emphasize that normally the amount of commissions of a block is usually less than 0.5 ETH , although it can go to 1 ETH or more if there is a great use of smart contracts or new ones are deployed. When there is network congestion , things change, since normally 2 ETH per block is spent by far . If this happens with this new mechanism, the money will begin to fall.

When will Ethereum London go live

The updates in the blockchain are not established with an exact date, a certain block is established. Ethereum London will be activated on block 12,965,000, which is scheduled to be generated between August 4-5. When this update happens, it will be necessary to update the client for mining and the wallet to be able to connect. This is because Ethereum London is a “hard fork”, an important update in the operating rules of this blockchain.

Final words on Ethereum London

Although it is an important update, it also does not bring great news to the operation of the Ethereum blockchain. Mining continues to be a fundamental element, which is why the “difficulty bomb” is delayed for a few more months, which could be delayed again in December. Ethereum London makes Ether potentially deflationary and establishes mechanisms to control the increase in the cost of the “base commission” both in transactions and in the use of smart contracts.

We explain in this article what Ethereum 2.0 is and how it will work

Without a doubt, the big Ethereum updates will arrive in 2022, which will be when it moves to Ethereum 2.0 based on proof of stake. A change that is generating enough doubts regarding the centralization of its operation, already quite centralized in itself. Although EIPs are public and their integration is debated, the final decision is in the hands of Vitalik Buterin and the developers of the Ethereum Foundation.

by Abdullah Sam
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