Cryptocurrency Mining and Its Difficulties
By Space Coast Daily // June 16, 2022
Cryptocurrency mining is the method of taking out cryptocurrency through a system by solving pre-established mathematical data processing. Like other mining industries such as coal and data mining, cryptocurrency has many complexities. There are prevailing insecurities related to cyber-attacks and expenses that need to be resolved for the smooth functioning of crypto mining.
If you are interested in learning about difficulties in a cryptocurrency like an eth mining difficulty, then keep on reading this article.
What do Crypto Miners do?
For beginners, it is to know that Blockchain technology is the fountainhead of all cryptocurrencies. Blockchain are digital archives or records decentralized in nature used for preserving information.
In particular, they include verified data blocks made of long strings interconnected by hashes. It is important to note that data must be processed and then confirmed for the establishment of the blockchain. Miners get cryptocurrency for putting effort by receiving incentives for transactional validation. Cryptocurrencies used by people are an incorporated incentive structure known as proof-of-work through a software protocol that cultivates blockchain and Bitcoin.
Initially, cryptocurrency mining was an easy process made possible by using a computer only. However, circumstances have changed since a lot of people started mining.
Block time is the method by which each cryptocurrency operates. The process of block mining requires some time. For example, Bitcoin takes 20 minutes while Ethereum takes 20 seconds for a block mine. Now, personal desktops are not feasible for this entire process. Instead, miners need to have computers with high processing speed. To get precedence over rivals, many miners use Application-Specific Integrated Circuit (ASIC) equipment.
Cryptocurrency mining is a recently introduced profitable industry. But there are three major hindrances that miners need to face. We are here to offer you a pragmatic solution to these problems.
Difficulties faced by cryptocurrency miners
1. High energy cost
Increasing ASICs’ processing power (Application-Specific Integrated Circuit) into a single solution would likely make the mining process profitable. For excellent power output, you need to pay huge bills for electricity.
CBS News has published a report saying that bitcoin mining consumes more energy than 150 countries. Massive amounts of energy are required for the validation of cryptocurrency transactions via “nonce,” which is a mathematical issue, and the creation of new blocks.
The influence that cryptocurrency mining has on the world’s energy supply and emissions of greenhouse gases is causing environmentalists to express grave worry, just as it does with other energy-consuming resources such as petroleum and coal. The worldwide community and crypto miners are on opposite sides regarding this contentious issue. In order to take steps toward mitigating the effects of climate change in this industry as well, there is a pressing need for a workable solution to the problem.
Sources of energy that do not replenish themselves significantly contribute to the release of carbon dioxide. According to the findings of a recent study, the demand for energy around the globe is expected to rise by at least 30 percent between now and the year 2040. The Bitcoin mining business is responsible for the emission of about 22,862 kilotons of carbon dioxide each year, which is a pollutant that has a negative impact on the environment.
However, some solutions to the problem are given below.
■ For the requirement of less electricity consumption, there are some protocols that Crypto miners can use. One of them is the Proof of Stake (PoS) consensus. It protects networks by demanding a stake in the assets of crypto miners. In the contemporary situation, Cardano and Ethereum are at the top of this swing. The point to be noted here is that attention prescribed to higher stakes does not solve the problem of centralization. Those who own the financial capacity to keep cryptocurrency are the significant beneficiaries of this system.
■ It is better to use sustainable sources such as hydroelectricity or solar energy in data centers and mining facilities for conducting mining operations. Prominent firms like Burency and Hydrominers extricate energy costs from hydroelectricity mining practices. To reduce the cost of heat mining, many agencies prefer to install their plants in colder regions.
ASIC (Application-Specific Integrated Circuit) is helpful only for mining some of the cryptocurrencies. After introducing a specific ASIC for a circulating coin, it becomes hard to mine one without using them because of its strength. Despite having advantages for the cryptocurrency industry, it is also a problem for some crypto miners. They have some grievances over the manufacturing processes of ASIC and its impacts. Production of ASCIs concedes the monopoly to a few companies deriving centralization of the sector.
However, there are two pragmatic solutions to this menace. First, it involves the decentralization of the manufacturing process of ASIC through miners. The second is introducing a new hash algorithm that will eliminate all existing ASIC miners.
3. Vulnerability to Crypto-jacking
The guarantee of safety rights is the primary purpose of this decentralization process. A democratic system is the need of the hour. In an age of cyber warfare, hackers’ access to mining resources is becoming a potential threat to the sector.
For example, in 2017, the Auguard observed a growth of 31 percent in in-browser crypto-jacking. Cyber attackers use malware and similar techniques like ransomware for cryptocurrency mining. The hack uses individual PCs. The concentration of power in a few hands is also vulnerable to such attack.
Digi byte adopted five protocols, and an improvement to Proof of Stake (PoS) on its blockchain platform is instrumental in defending crypto miners against these malware attacks. There is no prevailing traditional solution to this problem except PoS.
However, the contribution of this PoS to the entire insecurity of this system is 20 percent. If one system gets vulnerable, 80 percent of the system can work smoothly. This hybrid system can also become significant for the decentralization of the sector. Despite having all mining, a miner will control only 20 percent of the entire network in a given time under this protocol. Yes, it is for mining even 100 percent of the coins.
Crypto mining is a booming industry. Many people become a millionaire. If you are interested, keep in mind the two most important things. Make sure minimum expanse and strong defense. The time will come when you will start getting the fruits of your investments.