Cryptocurrency mining is the process of releasing digital currencies into a network by solving a provided set of mathematical problems. And just like any other mining industry, this industry also comes with certain cryptocurrency mining challenges. But before we go into the details of these challenges let us know some terms in detail. If you are wondering, is it too late to start mining cryptocurrency 2021, then your answer would be a NO. But before you start you should know the challenges that will come on your way and how to overcome them.
What Is Bitcoin Mining?
Bitcoin mining is carried on by high powered computers that solve complicated mathematical problems. These mathematical problems are so complex that they cannot be solved with hands. It is the process of formulating new Bitcoins through the process of solving complex mathematical problems. In Bitcoin mining, it is important to keep a track of the transactions through a ledger upon which Bitcoin is based.
There are several calculators on the internet that enable the users to enter key inputs like the hashing power, hash consumption, Bitcoin (BTC) pool fee, and the electricity cost. Based on these inputs the Bitcoin mining calculators will show the amount or number of Bitcoin you can expect to earn through your activity. For mining Bitcoin, you will also need a Bitcoin mining software and a digital wallet to store all the rewards that you have earned.
3 Prime Cryptocurrency Mining Challenges
The concept of cryptocurrency minion has been in action for a long time, and it has proven to be profitable for many people. Still, now crypto mining can still be a profitable venture, but it is important for you to know the cryptocurrency mining challenges that the miners face and how they can be reduced.
High Energy Cost
Problem: To increase the success of mining there is a need to combine hundreds of ASICs to solve just one problem. But to do so it will need extremely high power output that will cost the miners high electricity charges. According to a report, the energy consumed by Bitcoin is more than the energy consumed by 150 countries.
Solution: But as mentioned before, these challenges have solutions as well.
- Cryptocurrency miners can go for less power intensive protocols. One of them is the Proof of Stake (PoS) consensus that provides network security through staking of digital currency. Presently Cardano and Ethereum are leading this process.
- Conducting your mining activities on mining facilities and also on the mining data centers that are backed up by renewable solar energy and hydroelectricity.
Vulnerability To Cryptojacking
Problem: Beyond formulating a democratic space, the real essence of decentralization is to maintain security. But now the hackers are getting smarter in tapping all your resources on the internet. According to a report, there is a 31% increase in in-browser crypto jacking. In the meantime, the concentration of power is not only susceptible to malicious attacks, but the cybercriminals are adopting a tactic that is similar to ransomware to mining digital currencies remotely from people’s computers.
Solution: To encounter these cryptocurrency mining challenges there is no conventional method, but an improvement to PoS that is adopted by DigiByte which utilizes a hybrid of five protocols on their blockchain platform is a strong weapon that can be used by the crypto miners to save themselves against these forms of attacks.
Problem: ASICs have proven proficient at mining a digital currency solely. They have so much power that once there is a release of a coin specific ASIC, it sometimes becomes a challenge to mine without them. This can be termed as a great development in the cryptocurrency industry, many perceive that as an issue as there are many crypto miners who are influencing the manner and way in which the ASICs are being formulated or designed. And since the ASIC manufacturers are limited, soon this mining space will be centralized.
Solution: To avoid this challenge the manufacturing process of these ASIC miners needs to be decentralized and put into effect a new hash algorithm that will effectively clean out all the already prevailing ASIC miners.
Crypto mining is a lucrative activity but starting to do so without proper market research will definitely put you in a hole as there are several cryptocurrency mining challenges that need to be addressed properly in order to continue mining digital currencies.
FAQ On Cryptocurrency Mining Challenges
The cryptocurrency mining challenges include miner consolidation, energy consumption, encryption security, and miner income fluctuation.
Cryptocurrency mining generates good quantities of electronic waste or what is known as e-waste. The reason behind this is that Bitcoin mining is performed with specialized hardware that becomes obsolete approximately every 1.5 years.
It’s not too late to mine cryptocurrency but presently mining bitcoin is unprofitable based on condition and investment one will need for mining like graphics cards, electricity, or any other hardware requirement.