It’s a part of human nature to aspire to improve and use our resources in order to produce something, and being a part of cryptocurrency mining could fall into that natural desire. For quite some time now, mining was considered a golden industry where you could just set up your mining rigs and get rich overnight. Sadly, those days are long gone and this business is starting to become more difficult and more competitive. Although direct ways of accessing this market are getting thinner by the minute, there are other opportunities for getting your piece of the pie. So the question remains; is it still possible to mine by yourself? How harmful to the environment is the process of mining, and what complications are now facing miners? Let’s dig in and find out!
The home mining age is gone
There comes a point in any industry where the big companies come to replace disjointed enthusiasts. It should come as no surprise then that for cryptocurrency mining, this boundary has already been breached.
“Gone are the days when you could mine with an ordinary computer. ASIC-processor-based machines like Bitmain’s Antminer S9 are sometimes called game-changers for hobbyist miners, but they are far from cheap.”
It’s true that you can still continue as a single enthusiast, but in order to maximize your performance and profits, you’ll need organization. Whether it would be through a huge mining facility, joining a mining pool, or just making an investment into a mining company, there are a lot of more productive ways to do make profits, but every one of them comes with its own set of advantages and disadvantages.
Measuring the expenses of purpose
There is nothing in this world that comes free. Something must be sacrificed in order to gain what you want. While mining might seem to be a pretty passive way of earning money, it’s the costs of production that complicates it a lot. First, there are a lot of technical expenses and equipment easily becomes outdated and broken. Second, the amount of energy consumption is simply ridiculous. So, what is the purpose of this course of action then?
“I would personally feel very unhappy if my main contribution to the world was adding Cyprus’s worth of electricity consumption to global warming…” by Vitalik Buterin
It’s true that with costs being so high and motives powered by greed, mining has its share fair share of flaws. Still, there are many positives that this activity can bring, and the whole world benefits from them.
“In countries like Zimbabwe and Argentina, Bitcoin has sometimes provided a more stable place to park money than the local currency. And in countries with more stable economies, Bitcoin has led to a flurry of new investments, jobs and start-up companies…”
From the ideological perspective, mining turns out to be more of a concept itself that creates purpose and proves the importance of cryptocurrencies like Bitcoin by the sheer volume of commitment. With so many people and resources involved, you can’t just stop everything over a cryptocurrency fiat cost correction or because of the local legal and political issues that might arise in some countries. This commitment to an entire global community creates the momentum for the blockchain to move further over any obstacle or inconvenience.
“The electricity usage is really essential,” said Peter Van Valkenburgh, the director of research at Coin Center, a group that advocates for virtual currency technology. “Because of the costs, we know the only people participating are serious, that they are economically invested. That creates the incentives for cooperation.”
In this case, the energy spent is not just a waste of resources, but a proof of work. One of the methods for counting GDP is about calculating all of the costs because you will definitely have to answer for them. Energy consumption might be seen as not just an issue but as evidence of imperfection that stimulates the very young industry to develop further. This expense-based point of view could actually be seen as a short-term one.
While mining energy consumption levels are being talked about as a problem, there are other issues that might change your perspective. Sure, huge energy consumption is bad for the environment overall, but there might be a solution to make everyone happy. Energy generation is a huge industry, and it’s hard to produce the exact amount that is needed for any given time. It’s typically safer to produce a bit more than what would be used. So, what can be done with the excess power? Those surpluses might be used for mining instead of going to waste.
“…certain power generators should consider using cryptocurrency mining to their advantage, by installing cryptocurrency mining rigs on, or in close proximity to, their operations. Cryptocurrency mining uses mining rigs to convert electricity into cryptocurrency coins. Running mining rigs at full speed is a highly energy-intensive process. Power generators can use excess power, which would otherwise go to waste, for cryptocurrency mining.”
Here we can see mining as an effect of uneven energy distribution around the world that creates pockets of cheap sources for mining facilities to feed on. In this regard, they are more of an effect, and with other uses for the energy arising and marginal revenues from mining getting lower, a new form of energy-friendly mining might arise.
Also, some coexistence on official levels might occur between energy-producing companies that can use that excess energy without much investment into their output capacities and mining facilities. While some of us see mining as some “sort” of evil, it is a natural reaction to the market realities.
Complicated theories and the hard truth
While mining seems to be pretty simple in concept, there is much more happening behind the scenes than most people realize. First of all, this market is not as straightforward as some would think. While mining equipment performance optimization is a core aspect of mining, there are actually a lot more strategic decisions for a miner to make. And those decisions are being heavily influenced by the actions of the majority.
“Miners want to attach their blocks to the chain to which they expect the others will attach their blocks
1. Choice of which block to mine = coordination game
2. Multiple equilibria, some without forks and others with forks
Problem with forks – loss of rewards for orphaned blocks, blockchain instability, uncertainty about consensus, undermines credibility/value of cryptocurrency.”
There always comes a payoff with any strategic decision that has been made. Now, the marginal incomes of pure, aimless mining get smaller and smaller, making miners face a hard choice: whether to keep on working with the mainstream coins or switch to the less popular altcoins.
“Suppose that a branch attracts fewer miners and computing capacity than another. Then a miner faces a trade-off:
1. If he successfully mines in the first branch, his reward is lower than if he succeeds in the other branch;
2. On the other hand, his probability to solve a block is higher on the first one since the difficulty of mining is larger on the latter.”
With that in mind, we can witness the actual reality of the situation: while competition creates a fair market, there are still made a lot of poor decisions involved due to the lack of cooperation between mining entities and their peers.
What does decentralization truly mean?
One of the primary concepts of the blockchain is decentralization. Mining activities now are commonly seen as a source of centralization that might change the way the whole system develops. While it’s true that much of the computational power is being concentrated in the hands of huge companies and pools, you could think that it doesn’t matter because their decisions could be viewed publicly. However, this is slightly far from the truth.
“At a high level, mining pools are, in fact, quite centralized. A mining pool, however, is quite granular in reality. A pool includes the interests of all individuals who invested their hardware with the aim of increasing their hashing power.”
While on the one hand, we have a small pool of beneficiaries who might hold a significant influence over the network, on the other there are a lot of miners that have their own share of interests, creating an aggregated counterforce. From this perspective, the involvement of private investors in the mining world kind of makes mining more decentralized with investors not having control over companies by themselves, but having the means to make decisions en masse. For example, if your actions would not please them or if your performance is lacklustre than there is a chance that they might turn to your competitor, which bolsters the performance of a crowdfunded mining platform.
What is left for you?
The difficulties that various types of mining activities have to face are on the rise now. With this in mind, more and more potential investors tend to consider direct investments into crowdfunded variants of mining solutions over cloud or mining pool combinations. While there might be a limit to one’s initiative with this move, there are certainly benefits to leaving a professional to do their job instead of gathering your own pile of mistakes.
Even if there are already some projects present in this segment, there is also a new player which has been added to the pool of industrial miners.
“Holding a securix token has no hidden costs and allows for a high output per token as mentioned above. No company is guaranteed to succeed, of course, but given that Securix has its token backed by their physical assets (the mining hardware), an established team, and an extensive white paper that analyses their potential market it is safe to say they are here to stay.”
Having experience in the field means understanding when do you need to change to adapt to this ever-changing environment. But security is a thing you should always care about.
Who is the one to judge?
While a discussion about the various aspects of any industry might create the perfect solution in a vacuum, it’s the liability of the actual implementation that makes a difference in the end. Of course, there are some solutions currently available for those who want to deal with mining while controlling their risk from the “safe distance.”
“The company is committed to simplifying investment in cryptocurrency through its innovative asset-backed SRXIO token, environmentally conscious power generation, and easy-to-use Mega Vault Wallet app.”
We’re used to considering inventions and innovations as the only things that make our lives easier. But, in fact, it’s not the discovery itself that improves our lives, but it’s the various applications and implementation that increase our welfare over time. In this regard, the security of your investment is something you should always be able to check on.
Seeing the mining industry become more diverse is definitely a good thing. With a variety of approaches and lots of groups with different interests (but with the same goals), it’s the community itself that reaps most of the benefits from this. With the blockchain being a community-driven solution, the growth of accessibility and the involvement of mining activities might prove to be inconspicuous, but a crucial step for future development.