What is Cryptocurrency Mining?

Cryptocurrencies also need to be mined, much like printing devices create traditional currency. The Mining method is entirely decentralized to ensure cryptocurrencies’ vital network integrity and safety. Blockchain is the subject matter of cryptocurrencies. A blockchain is said to operate when a new block is added to an existing block to cater to additional transactions. The encrypted in-built features ensure that previous transactions can’t be changed or reversed by anyone, giving cryptocurrencies the quality of immutability. A reward is given to the user who adds a block, and the amount of the award is determined by the number of blocks mined by the miner. Adding a new block requires a lot of computer power which can be done using the computing devices only. Crypto mining hardware or nodes are the devices that are utilized to add previously mined blocks. You must buy crypto mining hardware from a trusted source, so the output delivered cannot be compromised.

Evolution of Cryptocurrency Miners

A Cryptocurrency network’s success depends upon the mining hardware, which determines whether miners can perform what they do, essentially performing the computations required to create blocks containing transactions on the Blockchain. There has been a great evolution seen over time in the miners. However, let’s look at the mining hardware types and what led to their evolution. As the difficulty in mining arose, the need for new hardware miners increased. This demand for advanced miners led to the evolution of cryptocurrency miners.

Source: CoinDesk

CPU Mining

Earlier Bitcoin (BTC) miners were able to successfully mine blocks using the CPUs in their Personal Computers(PCs). It was feasible at those times since there were comparatively few miners present. As a result, the collective hash rate was substantially lower during the early stages of the Bitcoin network. Satoshi Nakamoto mined the initial Bitcoin block. Nakamoto didn’t require any specialized hardware to start the Bitcoin blockchain because he was the only miner on the network at the time. He managed to build Bitcoin blocks on a typical home computer. A higher mining success rate was achieved with less competition.

GPU Mining

The number of miners has increased along with a fascination with Blockchain and cryptocurrencies, which has led to increased rivalry for mining incentives. Due to this cycle, most miners of large-cap cryptocurrencies have switched from utilizing CPUs to employing graphics processing units (GPUs), as these systems can produce high hash power compared to CPUs. In 2010, the initial GPU mining software was made available. Apart from being far more rapid and productive than CPUs, GPUs also have some versatility in that they can mine several cryptocurrencies on several blockchains using different mining algorithms.

ASIC Mining

The third biggest advancement or evolution in Cryptocurrency Mining was the introduction of Application Specific Integrated Chip(ASIC) miners to the industry. In contrast to CPUs and GPUs, these gadgets were made specifically to mine Bitcoin from the start. It meant that every piece of hardware and software in these ASIC miners was already pre-designed and tuned to perform the specific computations required to generate new Bitcoin blocks. The first ASIC miner was introduced in 2012, offering a competitive processing power far greater than GPUs. ASIC mining power is typically measured in Terahashes per second (th/s), but GPU processing capacity is typically measured in megahertz (mh/s). These miners are far more efficient than any other type of miner and are used worldwide for impeccable results.

Challenges to Cryptocurrency Mining

With the advancements and evolution of cryptocurrency mining, there are a few challenges as well. These are the main challenges encountered by cryptocurrency mining are:

1. High Cost

Cryptocurrency mining is expensive because electricity is needed to run the mining hardware. Along with it, maintenance is required regularly. It requires a miner to spend plenty of money, which discards the cost-efficient nature of cryptocurrency mining. Bitcoin mining is becoming highly competitive due to great return rewards, attracting more people into mining activity. Miners must invest more computer power into their mining operations because of the growing competition and decreasing supplies. A single block or currency requires a lot of energy to mine, which makes it expensive because each miner must pay their electricity costs.

2. Cryptojacking

A cybercrime known as “crypto-jacking” involves attackers using people’s equipment to mine cryptocurrency. Profit is the motivation, as it is in many additional means of cybercrime, but unlike other threats, this one is made to remain fully hidden from the target. Cryptocurrency mining can be extremely profitable, but doing so is difficult without the resources to pay for high overhead. The illegal form of crypto mining, known as crypto-jacking, provides a quick, efficient, and cost-effective means to produce valuable currencies. Devices are hacked by hackers who then install crypto-jacking programs. The harmful software operates silently in the background, stealing from cryptocurrency wallets or mining for new ones. The unaware victims use their gadgets normally. However, they can experience lags or decreased performance.

3. Environmental Impact

Cryptocurrency mining has become one of the major contributors to the deterioration of the environment. As specialized mining hardware is required to create new blocks through cryptographic computations, it consumes much energy and electricity. Although coal, as well as other fossil fuels, are presently a key source of electricity around the globe, it is also true that burning coal contributes significantly to the rising risks of climate change as it emits carbon dioxide. Mining for cryptocurrencies has many environmental effects besides carbon dioxide pollutants. Countless amounts of electronic garbage produced through mining also contribute to a major depletion of the environment.

Sustainable Cryptocurrency Mining

The media below depicts the graph of the countries utilizing a sustainable energy mix.

Source: Bitcoin Mining Council

Although the crypto mining operation is causing many problems, the concerned companies have also found a way to eliminate these problems. Everybody’s concern was mainly drawn upon the electricity consumption and environmental impact. Hence, to resolve that, another solution is introduced in the present times, which is sustainable or green cryptocurrency mining. Although it is correct that cryptocurrency mining mechanisms use sustainable resources and power to increase productivity, the amount of such renewable energy and resources consumed depends greatly on the type of mining mechanism utilized by the miners. As a result of evolving mining processes, sustainable solutions are being introduced.

Future Outlook of Cryptocurrency Mining

Though advancements have taken place to a great extent already in cryptocurrency, a few things can visibly be seen to shape the future of cryptocurrency. Sustainable crypto mining is one of the things. As laws and other authoritative bodies emphasize the prevention of the environment more, a massive surge will be seen in miners going all green in the future. Another development would be the merging of AI and Blockchain together to provide a robust technological solution. Additionally, users can see rising interest in cloud mining for cryptocurrencies. In the future, people can mine cryptocurrencies without buying or setting up computing devices. Also, it will increase the effectiveness and profitability of cryptocurrency mining.

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