Key Challenges Faced By Crypto Mining
Crypto mining will allow you to generate cryptocurrencies by solving complex cryptographic problems using high-end specialized computers. It's a great alternative to buying using trading services like Bitcoin Rush. But like mining data or gold, crypto mining also has its share of challenges. Cryptocurrencies are based on an underlying blockchain technology where the blockchain is essentially a public ledger that can store data. To create this blockchain, data must be verified and this is why you need crypto mining. Miners can verify transactions and earn rewards when a block is mined successfully.
Earlier, it was possible to engage in crypto mining using personal computers. But today, there are many advanced miners in the market and things have changed as a result. Each crypto coin has a block time; this is roughly 10 minutes for Bitcoin and 20 seconds for Ethereum. So, personal computers cannot deliver this advantage and miners now need specialized machines called ASIC.
Key Challenges That Crypto Mining Faces:
- To start with, crypto mining entails high energy costs. You will have to combine multiple ASIC machines to be successful in mining. This will automatically require very high power and this translates into high power costs. According to CBS news report, mining Bitcoins actually leads to power consumption that is more than total energy consumption in 150 countries. How can this problem be tackled? Crypto miners desire less power-intensive operations like the PoS or proof-of-stake consensus. Both Ethereum and Cardano appear to be leaders in this but this is possible for only those who have the power to hold onto their crypto. It may be a good idea to run the mining in facilities or data centers which get power from solar energy and hydroelectricity. For instance companies like Burency and Hydrominers are lowering costs through the use of hydroelectric power.
- The idea behind cryptocurrency was to create a decentralized digital currency. And the essence of such as system is improved security. But, hackers are getting stronger by the day and more sophisticated at accessing your money. In 2017 there was a 31% increase in crypto jacking. Cyber thieves are using techniques like ransomware for remotely mining crypto coins from other peoples’ computers. While there is no textbook solution to this issue, there are measures like PoS used by Digibyte that uses a combination of 5 protocols on the blockchain to make sure crypto miners are protected against such attacks.
- Not all cryptocurrencies will need crypto mining. PIVX does not use the PoW or proof-of-Work protocol; rather it uses an advanced type of Proof-of-Stake. So, instead of running the high-end energy-intensive computers now anyone can buy PIVX units and earn rewards in the process. When users have PIV in their online wallets their machines will be remain up-to-date with their network and enable transactions. This kind of mining only demands that you keep you computers on; there is no costly hardware involved. So, PIVX is not going to face an energy crisis. The only drawback according to critics is that PoS currencies release the exact number of coins for the same energy costs, no matter what market conditions are. But PIVX can eliminate all transaction fees. While this can control supplies, it is not an ideal solution.