Interesting Cryptocurrency Mining Facts
With the rising popularity of cryptocurrencies a, it has become very important to separate facts from fiction. This is particularly important when it comes to cryptocurrency mining.
As more people try to get into cryptocurrency mining, many are finding out that it’s not quite what they envisaged. This is why we have written this facts based article to give intending investors a more realistic and objective overview of the crypto mining space. That said, let’s jump right in.
Cryptocurrency Mining is Rife in China
It is estimated that nearly 75 percent of the bitcoin mining pool is located in China. This is ironic in the sense that China itself has banned bitcoins as a cryptocurrency and all associated activities.
As a result, Chinese law enforcement agencies are actively cracking down on bitcoin mining pools located in the country. A recent incident involved the seizing of 600 bitcoin mining hardware in Tianjin from bitcoin miners who were using them.
Bitcoin Mining is Less Profitable and More Expensive
Before 2016, the reward for mining a bitcoin block was 25 BTC. Now, it’s been halved to 12.5 BTC per block mined. This will continue for another 210,000 blocks mined, and then halved again and so on.
This means that bitcoin mining isn’t as financially rewarding as it was a few years ago. Worse still, it has become increasingly more difficult to mine. This is because of the increased complexity of calculations miners need to solve before they can mine a block.
In a bid to increase profitability in the face of soaring equipment and energy costs, many miners have moved to localities with cheap energy costs.
Many are beginning to contemplate Scandinavian counties like Norway and Sweden, while others are looking to relocate to Venezuela where thee electricity cost required to mine 1 BTC is less than $600.
For those who can’t move, they are choosing to rent miners from mining pools and hoping to get paid for those miners. This is known as cloud mining.
Many are quickly jettisoning solo mining and joining mining pools in the hopes of profit maximization. If you’ll be joining the bitcoin mining trend, we do recommend pool mining as against doing it all alone.
Proof of Stake and Proof of Work Drive Bitcoin Mining
You would have heard of these two terms if you’ve been around. More popularly known as PoS and PoW respectively, these are the major mechanisms that drive the cryptocurrency industry.
PoW is the most popular with a 30 percent share, while PoS only boasts of 18 percent. There are also cryptocurrencies that combine both mechanisms. These are called hybrids and account for 8 percent, while a small 4 percent represent Proof of Importance (PoI) and Proof of Capacity (PoC).
If you want to mine cryptocurrencies, it would be safer to mine those using PoS or PoW mechanisms as they are popular and in demand. In case you were wondering, Bitcoin uses PoW.
Bitcoin Mining Chips Have Evolved
Bitcoin mining has come a long way from the early days when they could be mined on computers. Those days, you only needed a laptop or desktop to do the job. As it increased in value and demand, it needed more powerful processing units.
This birthed the need for graphics processing units (GPU) which were capable of producing more output faster. They were followed by FPGAs and now the more efficient and effective Application Specific Integrated Circuits (ASIC) miners.
Although these miners are often expensive to buy –usually costs between $1,000 and $3,000- they are currently the best hardware miners for bitcoins and other cryptocurrencies as they have high hash rates.