The Future of Crypto Mining
It seems like blockchain was a fringe technology just yesterday, and Bitcoin was not even on our radar as a legitimate type of currency or store of value.
The price of Bitcoin and other cryptos is a strong indicator of how public perception has changed in less than a decade. We can also look to technologies like exchanges, trading platforms, and integration with existing financial institutions to see how far we’ve come.
But maybe the most significant signal for progress has been the crypto mining industry, which has seen a transformation like nobody could have imagined in such a short timeframe.
What began as a way for hobbyists to plug in their gaming computers and squeeze out some passive income in Bitcoin quickly became a roaring industry with billions of dollars in hard infrastructure investment and human capital.
Now, we’re watching the crypto mining environment transform further as new issues come to the forefront, including regulatory crackdowns, environmental concerns, and even fundamental changes to blockchain standards like proof of work.
Where will crypto mining go from here? Let’s find out.
Crypto Popularity = More Difficult Mining
The laws of economics have played out time and time again in the world of crypto, and by every metric, we’ve seen crypto mining become more difficult as a result.
Here’s why mining crypto is far more of a challenge than it once was and what this means for the next phase of the industry.
Blockchain Competition and Hashing
The growing challenge of crypto mining results from the blockchain fundamentals that underly assets like Bitcoin and Ethereum.
These networks yield a limited supply of coins, requiring significant power and computing resources as more “blocks” are added to the network.
In other words, the difficulty of mining a single Bitcoin spike with the creation of each coin, demanding that miners increase the time and effort they spend to achieve the same result.
This leaves many crypto miners at a crossroads – do they double down on mining crypto by making a substantial investment, or is it wiser to leave the mining rigs behind and look for different ways to profit?
Hardware Prices on the Rise
Everyone is feeling the pressure of increasing tech prices due to semiconductor shortages, supply chain issues, and massive demand for everything from video game consoles to luxury vehicles that rely on this hardware.
The crypto mining industry is no exception, and you only have to track the prices of gaming rigs and ASIC units to see how quickly these costs have increased.
A mining rig that cost $1000 in 2011 may be more than three times that price in the current landscape, with many examples going beyond that. Even the hardware aftermarket is booming, showing that crypto miners are willing to pay exorbitant prices to get the machines they need.
The question now is: What’s the upper limit, and where does it stop? Will small mining operations be squeezed out of the equation due to the combination of hardware costs and the climbing challenges of crypto mining in general?
Hardware prices may not be a leading indicator of the state of crypto mining in general, but it shows that this industry is being taken far more seriously than it was just a few years back.
Finding New Opportunities
It’s not all doom and gloom for DIY crypto miners in search of a profitable setup.
Bitcoin and Ethereum may be the most prominent and competitive networks to mine, but that’s just the tip of the iceberg for the rapidly expanding world of crypto still to be explored.
While some miners may be prohibited from the big leagues by costs, plenty of options exist in the altcoin sphere, and in most cases, this is where we can see significant upside opportunities.
Yes, the next Bitcoin and Ethereum are already out there, waiting for miners to extract precious coins. With a shallow barrier to entry for newcomers with the right technology and a bit of risk tolerance, the possibilities are endless.
Before long, these select altcoins will rise to the surface with unique value points and enthusiastic communities, just as we’ve seen play out before.
This should be a beacon of hope for any hobbyist miners. There is always something new right around the corner.
Recent Trends in Crypto Mining
We’ve identified the macro trends moving the crypto mining space as a whole, but let’s zoom into some smaller trends that tell us more about where the industry is headed.
Rethinking Proof of Work
The Proof-of-Work consensus system is one of the great achievements of cryptocurrency and blockchain in general, but now, some of the top minds in the industry are questioning whether it’s the best way to move forward with mining.
More people are pointing out that PoW leads to the concentration of mining power in the hands of just a few key players, which clashes with the mission of crypto as a decentralized and equitable technology.
That’s why Proof-of-Stake systems are seeing more popularity, as evidenced by the rise of altcoins like Cardano, Solana, and Algorand.
These platforms are different in that they reward users who hold and “stake” tokens to power the network, requiring less energy and resulting in more even distribution of resources.
PoS has the potential to change how coins like Ether are mined in the future, as developers look for ways to make these networks more efficient and fair.
The Great Mining Migration
China has banned Bitcoin yet again, and this time, they sent a message to mining operations in the region. This means that crypto-friendly countries have the chance to invite wayward miners to their shores and set a strong precedent for the future.
As always, keep an eye on adoption and regulation to anticipate the next generation of mining whether it’s in the USA, Latin America, Central Asia, or elsewhere.
Renewable Energy Bitcoin Mining
The requirements to mine Bitcoin and Ethereum may be high, and hardware costs are certainly steep at the moment.
That’s why renewable energy mining is a huge differentiator in terms of profitability, not to mention long-term sustainability and environmental protection.
Expect to see industry pioneers explore new avenues for renewable energy mining and pave the way for the future of crypto as a whole.
The Crypto Climate Accord
With more than two dozen companies signing the Crypto Climate Accord last year, we saw mass enthusiasm in the support of renewable energy and conscious consumption of resources.
Carbon neutrality and avoidance of fossil fuels were two of the main points on the CCA agenda.
Not only does this encourage partnerships with renewable energy producers worldwide, but it also has the knock-on effect of pushing other industries toward a greener, more sustainable standard of operation and supply chain transparency.
How Do You Fit into the Future of Crypto Mining?
Are you an at-home crypto miner looking for the next big altcoin, or maybe you’re intrigued by the rise of renewable energy in the industry? If you’re curious about Proof-of-Stake, there’s also plenty to discover, and it may prove useful before long!
In conclusion, the future of crypto mining looks different from the past and present, but that’s a good thing. Stay tuned to all the crypto news as it develops and always be ahead of the curve.
Sources:
Bitcoin Mining Texas | The Guardian