The past, the present and the future outlooks of cryptocurrency mining
Cryptocurrency mining or crypto mining, represent a process in which transactions for various forms of cryptocurrency are verified and added to the blockchain digital ledger in order to be competitive with other crypto miners.
In a crypto network, mining is like a validation of transactions where successful miners obtain new cryptocurrency as a reward. This reward decreases transaction fees by creating a complementary incentive to contribute to the processing power of the network.
Cryptomining is an industry that continues to expand amid the bear market in virtual currencies, but it’s not easy to start mining them. If you want to start, you will need a graphics card or sophisticated CPUs (ASIC miners) which are often very expensive. It is also important to have cool temperatures during the whole year to be more efficient. And yet, cheap electricity counts too.
Enterprises and individuals are entering the crypto mining market with the aim to get more profit, along with the growth of virtual currencies. Since the public hype about blockchain and crypto mining expanded, competition has also increased, which means that it’s more difficult to receive a reward with the same amount of energy.
If you decide to try crypto mining you should have in mind that this is an expensive business. Successful miners are spending thousands of dollars to set up a profitable mining rig. Smart miners need to keep electricity costs under $0.11 per kilowatt-hour, mining with 4 GPU video cards will net them around $8.00 to $10.00 per day or around $200-$300 per month.
You can also make some profit with another consensus algorithm such as Proof of Stake (PoS). It is possible to stake a specific amount of coins in order to validate a new transaction and those that hold the largest amount of coins have a bigger mining power. Ethereum wants to change its consensus algorithm to PoS because the developers claim it is more effective to secure the network. At present, miners can process ETH transactions to win Ether (ETH).
During a bear market like this one, it is not easy to improve mining efficiency because it’s necessary to reduce the rate paid for electricity and maintain hardware devices cool to work more efficiently. It’s also possible to buy new hardware miners that can cost several thousand dollars. However, miners are impatiently waiting for new trends in the crypto market.