Cryptocurrencies have become incredibly popular - largely because of Bitcoin (Bitcoin). In just a year, its value has grown from $1000 to $15, and currently it ranges from $000 to $6000, while the range of daily movements is very large. This is a potentially profitable, but also risky investment, given the novelty of the very concept of cryptocurrencies. In addition to trade, consumers are increasingly paying attention to Mining — the process of generating new digital coins. However, the culture of mining is rapidly changing.
What is mining?
Before we understand how cryptocurrency mining is changing, we should remember how it all began and at what stage we are at the present time.
Most cryptocurrencies are issued in a limited volume for the sake of maintaining value, and they need some kind of primary distribution (as in the case of ordinary money). The system relies on a peer network (hundreds or thousands of computers) that checks all transactions. In other words, all computers on the network must confirm the transaction before it is entered into the block and included in the blockchain.
Mining solves both problems. A network of computers confirms transactions by finding some 64-valued hexadecimal hash key. As soon as it is found, the block joins the blockchain, and the node that first solved the problem receives a fixed reward in the cryptocurrency.
Finding solutions requires a lot of computational power, high-performance video cards and processors, fine tuning of equipment and, of course, huge amounts of electricity. However, this does not stop millions of people from participating in mining in the hope of extracting cryptocurrency.
Growth in demand and popularity
Watching the rapid rise in Bitcoin, people began to realize the profitability of mining. As a result, the number of miners is constantly growing. This is not to say that it is bad, but in parallel there are some serious side effects.
First of all, the cost of graphics cards is growing rapidly. A year ago, Nvidia GeForce GTX 1060 cost only $ 200, today these GPUs are sold at $ 400 − 800. Graphics cards are an integral part of mining farms, but they are also used for computer games and other applications. Thus, consumers who are not interested in mining are forced to overpay.
A large number of miners reduces the likelihood that your computer will select the correct key first and reduce the likelihood of winning. To mitigate the negative impact of this factor can work in pools.
51% Pools and Attacks
To increase the likelihood of earning money, many users join in mining pools. These pools combine the computing power of all members, regularly pay a reward and charge a small management fee.
At the same time, the pools open the door to the 51% attack. It happens when a user gains control of the 51% of computers on the network. Using a dominant position, he confirms transactions beneficial to him.
Other security threats
The popularity of crypto-mining leads to the emergence of new, previously unknown threats, since attackers are trying by all means to gain access to computer facilities and use them for mining.
For example, in some cases, hackers or even ordinary employees installed mining software on corporate computers. It ate up resources, slowed down the processors and shortened their service life.
Thus, owners / managers of companies have to spend time and money on installing special programs to combat secret mining.
New laws
The legal status of Bitcoin and cryptocurrency now depends on the country. Some states, for example, the USA treat digital currencies quite liberally; in other countries, such as Russia, the status of cryptocurrencies is not entirely clear.
In any case, new laws governing the mining and exchange of cryptocurrencies are gradually emerging. For example, Russia is going to introduce a single tax rate on all operations on the extraction of cryptocurrency.
New rules and regulations can significantly affect the profitability of crypto production and cool down the miners.
Global implications
1. Change in cost structure
Today, creating your own mining farm is not as easy as before. Costs are higher, profitability is lower, and the situation will only get worse in the future. However, mining is necessary for cryptocurrency, and if it becomes too expensive, the entire structure of the cryptocurrency world will weaken.
2. Growing number of threats
The popularity of mining leads to the emergence of new unique problems related to the security of both miners and society as a whole. Too high activity of miners may pose a threat.
3. Community development
Changing the type of people involved in mining cryptocurrency. Some are more addicted to the process, others leave mining because of the changing dynamics.
Future
Cryptocurrencies are with us for a long time - even the tightening of regulation in different countries will not affect this fact. Their popularity will only grow.
The future of mining will depend not only on global trends, but also on the answers to a number of questions. What happens when the main cryptocurrency reaches the maximum offer? Which of them will survive and which ones will cease to exist? What place in our life they will take?
It will be an interesting journey for investors, techno-enthusiasts and economists, no matter how long and dangerous it will be.