Crypto mining has garnered a lot of popularity in recent months, and it is for both right and wrong reasons. The growing crypto buzz has so much shifted the attention of most people to the end-product, and every few people care to know how these digital assets come about. Today, different governments are clamping down on mining due to its environmental impact.
The Chinese government is currently cracking down on crypto miners, and the resultant effect has reverberated across the crypto space. Although other countries like Thailand are also cracking down on crypto mining, China stood out because more than 60% of miners are based in China.
On the other hand, the government of El Salvador is working on utilizing volcanic energy to mine bitcoin. This will be a total shift from the use of non-renewable sources of energy that is harmful to the environment. For those of you who might be wondering what crypto mining is, adding transaction records to the blockchain protocol is the process of adding transaction records. In order to add the record to the blockchain, the miner must have to solve a computational puzzle.
Mining is essential in the crypto space for many reasons
Crypto miners do not just add any transaction record to the blockchain network; these transactions are vetted and verified to be correct. Therefore, without the mining process, there will be no way to ensure the integrity of the blockchain protocol. With their power-intensive computers, these miners can listen to transaction requests across the entire blockchain network and sort out the valid ones.
Just like bank tellers, these miners check to ensure all things are in place before validating a transaction. Miners lookout for two things while validating a transaction. First, they check to make sure that the digital signature of the recipient of an input proves that they are the right person to get the input. Secondly, miners also help to make sure that the recipient is yet to use that input.
Crypto mining helps prevent a problem known as “double spending,” a form of high-tech counterfeiting. Imagine a user say Dave has $10 and gives it to Jane. Can Jane be certain that she has received $10 from Dave and is not fake? It would have been easy in real life, but it is not that simple in the digital world. Upon validation, if transactions fail to check due to counterfeiting, miners will not record that transaction, and the fraud will be averted.
Although crypto mining has lots of benefits, two major problems have cast a big shadow on mining
The computational puzzle that miners need to solve before adding a block to the already existing blockchain requires enormous hardware. This hardware is known as Application-Specific Integrated Circuit (ASICs), and they consume a lot of energy.
According to the Cambridge Bitcoin Electricity Consumption Index, bitcoin has the same energy consumption rate as Argentina. This means miners spend a lot of money on energy to power their equipment.
The Application-Specific Integrated Circuits doesn’t come cheap, and you will need hundreds of them to execute a mining process. With this expensive AISC equipment, not everyone can get into the business of mining cryptocurrency. However GoMining is already solving the problem of the high cost of equipment – the company has created a token (GMT) that allows holders to earn income from mining without having to own any ASIC equipment. Therefore, instead of owning the expensive and energy-intensive ASICs to mine bitcoin, holders of the GMT token can share the mining income generated by the company’s fleet of devices.
There are other companies also seeking to offer a better solution to the problems of mining. Gryphon Digital Mining platform is planning on creating the largest bitcoin miner with little or no carbon footprint. Another company that is working to solve the high energy consumption rate of mining is Mercuria.
According to the CEO, Marco Dunand, the company is seeking to partner with crypto miners and supply them with renewable energy for their mining processes. This will help reduce the emission of carbon (IV) oxide emission associated with non-renewable energies.
The concept of mining is integral and essential to the future of cryptocurrency and blockchain networks. Government should be more diplomatic in its clampdown on crypto mining. Instead of shutting down a mining site, there should be a roadmap that miners should follow in order to achieve a robust and environmentally friendly. Also, more crypto projects need to rise to the occasion in tackling the problems of mining.
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