Will ALEO Mining Be More Profitable After the Protocol Upgrade?

SUMMARY

Starting August 1, 2025, Aleo’s mining protocol will enter a new era—transforming from pure Proof-of-Work (PoW) into a hybrid PoS + PoW model. This major shift, defined by the approved ARC-46 proposal, introduces a staking requirement for provers (i.e., miners) in order to submit solutions and earn block rewards.

For current or prospective Aleo miners, a critical question emerges:

Will Aleo mining become more or less profitable after this protocol upgrade?

Let’s unpack the mechanics and economic implications of ARC-46 to help answer that.

Understanding the ARC-46 Upgrade: What’s Changing?

Under the current setup, anyone can mine Aleo using computing power alone—no need to lock any ALEO tokens. Starting August 1st, that’s no longer the case.

Key Changes:

• Staking becomes mandatory to submit PoW solutions.
• One solution per epoch requires a specific amount of ALEO credits staked.
• More solutions (i.e., more hashpower) = More staking.
• Stake requirement increases quarterly for 2 years (see table below).

Quarter	Month	Stake Required per Solution
Q0	0	100,000 ALEO
Q4	12	1,000,000 ALEO
Q8	24	2,500,000 ALEO

This turns the protocol into a “compute + capital” game: you need both hashing power and a staked position in ALEO tokens to earn rewards.

What This Means for Miners

Upside: Bigger Rewards for Committed Participants

Miners who stake sufficient ALEO will gain two key advantages:

1. Reduced competition from low-effort miners: Since entry now requires significant token holdings, many casual miners will exit, leaving a smaller, more serious participant pool.
2. Dual yield potential: Your staked ALEO earns staking yield, and your PoW mining earns block rewards. If ALEO’s token price increases, this could significantly amplify returns.

Downside: Higher Entry Barrier and Capital Commitment

• To fully utilize 1 GH/s of mining power, F2Pool estimates you need to stake around 4,800 ALEO (at Q0 requirement).
• That cost will grow as the staking requirement rises.
• If you fail to stake enough, your hashpower will be partially or completely invalid, and you’ll earn nothing despite consuming electricity.

What Happens If You Don’t Stake Enough?

Let’s say you mine 10 valid solutions in an epoch but only staked enough for 1. That means:

• Only 1 solution is accepted
• Remaining 9 are rejected
• 90% of your compute effort is wasted

In short: Unstaked hashpower is worthless after the upgrade.

Is It More Profitable?

Factor	Before Upgrade	After Upgrade
Entry Cost	Just mining gear	Mining gear + ALEO stake
Rewards	Depends on hashpower only	Depends on hashpower and stake
Difficulty	Very competitive (low barrier)	Lower competition (high barrier)
Long-Term ROI	Moderate if price stable	Potentially higher, but capital-intensive

So, the profitability gap will widen:

• Small miners or those who sell all their rewards: Profitability drops or becomes zero.
• Long-term holders who stake and mine: Likely see higher profitability, better reward ratios, and less competition.

What Should Miners Do Now?

1. Accumulate ALEO credits

F2Pool has already paused daily payments so that miners can automatically build up balances for staking post-upgrade.

2. Calculate your target staking amount

Base it on your hashpower. For example:

• If you’re running 5 GH/s and want 100% solution validity:5 GH/s × 4,800 ALEO ≈ 24,000 ALEO needed (for Q0)

3. Monitor token price and network changes

If ALEO’s price rises, early stakers benefit from both yield and price appreciation.

Final Thoughts

Will ALEO mining be more profitable post-upgrade? For the prepared miner, the answer is yes.

This new era rewards miners who are:

• Technically capable
• Financially invested
• Long-term aligned

If you’re willing to stake, optimize, and stay, you’ll enjoy better ROI, higher network trust, and reduced mining competition. But for pure “hash-and-dump” participants, this marks the end of easy profits.