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).

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?

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.

FAQs – ALEO Mining Post-Upgrade

Q1: How much ALEO do I need to stake to make my mining profitable?

To make Aleo mining profitable under ARC-46, you must stake enough ALEO credits to match your hashing power. For example, with the Q0 requirement (100,000 ALEO per solution per epoch), it’s estimated that 1 GH/s of hashing power requires around 4,800 ALEO staked to ensure all your solutions are valid. This amount will increase every quarter, so miners must adjust their stake accordingly to maintain profitability.

Q2: What happens if I don’t stake enough ALEO after the protocol upgrade?

If you don’t stake enough ALEO, only a limited number of your mined solutions will be accepted. The rest will be discarded, resulting in wasted energy and zero rewards for excess hashpower. For example, if you stake for 1 solution but submit 10, only 1 will be valid—the other 9 earn nothing. This makes staking essential for effective mining.

Q3: Is Aleo mining still worth it after staking is required?

Yes, Aleo mining can still be highly profitable—but only for miners who combine hashpower with token staking. The new model discourages short-term or low-commitment miners while rewarding those who hold ALEO and actively support network security. With reduced competition and dual earning potential (staking yield + mining rewards), committed miners may see higher returns than before.