One of the most important and prominent processes in the blockchain space is crypto mining. Crypto investors have been obsessed with mining since the inception of Bitcoin (BTC) in 2009, and the whole process has undergone tremendous changes and evolution in such a short period of time. Simply put, crypto mining is “the process that Bitcoin and several other proof-of-work (PoW) cryptocurrencies use to generate new coins”. However, the process also involves validating transactions on the blockchain and adding them to the distributed ledger to protect the chain from double spending.
It involves a vast, decentralized network of computers around the world that come together to solve complex computations to create a virtual ledger that protects the distributed ledger. In return for contributing their processing power, “miners” are rewarded with new bitcoin or cryptocurrency.
Why is crypto mining so important?
Most people think that crypto mining is only used as a way to create new coins, but this is far from the truth. At its core, crypto mining involves the security of digital transactions on the blockchain. As mentioned above, this process makes the blockchain network so secure and prevents double spending of digital currencies on a distributed network.
Similar to fiat currencies, when one uses cryptocurrencies, the digital ledger needs to be updated by debiting one account and crediting another. On the blockchain, the process is easily manipulated as everyone’s digital ledger is updated. To ensure that the data placed on the digital ledger is accurate, only verified miners can update transactions into the ledger, protecting the network from any double spending.
Unlike the banking system, the process of using mining to prevent counterfeiting is much cheaper, making cross-border payments affordable for users. All in all, mining virtually eliminates the need for banks to act as middlemen to ensure that accounts are debited and credited correctly.
Despite the advantages of mining, the process has received strong opposition and criticism from several factions around the world – with environmentalists being the most critical of the process. Proof-of-work mining, the process of mining Bitcoin, Ethereum (currently), and other select cryptocurrencies, has been widely criticized for its high energy consumption and the expensive hardware required to mine.
Nonetheless, the craze for mining chips and the environmental impact of the manufacture of these chips has also been a major concern for mining advancements.
How the crypto mining scene is evolving
In the early days of Bitcoin mining, miners could easily use their normal computers and CPUs to mine the cryptocurrency. However, as cryptocurrencies became more popular, computing power grew, and mining required more processing power, 2013 ushered in the GPU mining phase. At the peak of cryptocurrency mining in 2017, there was an arms race in graphics processing units (GPUs) as people rushed to get better BTC mining chips. In fact, demand for GPUs is so high that GPU maker AMD posted its best financial results in more than a decade, as shares surged to their highest level since 2010.
However, as the demand for crypto mining chips further increased, and the price of BTC reached its historic price of $20,000 in 2017, GPUs became obsolete as mining rigs.rise An application-specific integrated circuit (ASIC) miner, a type of integrated circuit chip designed to specifically mine a specific cryptocurrency, has been revealed — revolutionizing the cryptocurrency mining game.
While ASIC miners process more computing power, they are expensive and complex to develop and manufacture. Therefore, these miners are very expensive and customers usually have to wait several months to receive their orders, which means that you will not be mining during this time. Unsurprisingly, ASIC miners are often acquired by large mining companies, making it impossible for small retail traders to mine Bitcoin, which runs counter to the overall idea of decentralization.
To this end, there are a growing number of companies, like tomi, that aim to bring electricity back to small retail miners through cloud computing.
The rise of cloud computing in cryptocurrency mining
Cloud encryption mining means that participants in the mining pool can purchase a certain amount of “computing power” and share the mining rewards proportionally according to the amount of rented computing power. Cloud cryptocurrency mining has become a popular way for people to mine Bitcoin and other cryptocurrencies as ASIC miner prices and fees have increased. Instead of buying expensive ASIC miners, people rent computing power from cloud mining companies and earn a portion of the profits.
Even though Bitcoin has been around for 13 years, no company has yet been able to offer a reliable and profitable cloud mining platform. There are still a lot of scams and fakes out there. A platform designed to change that narrative, Fumi, providing a solution to the blockchain world’s reliance on large server companies. The platform launched the MP1 supercomputer, the first in a series of home computing devices capable of tasks such as photo rendering, real-time ray tracing, accelerated AI computing, VR applications and GPU mining.
The project aims to bring as many people as possible into a decentralized cloud computing and mining network that allows anyone to share data and mine cryptocurrencies from anywhere in the world. Additionally, tomi is run by a DAO managed by TOMI token holders. DAO members will be able to submit proposals to advance the network and distribute the proceeds of a portion of the network’s revenue.
The future of crypto mining
As mentioned above, the development of crypto mining is growing rapidly as more and more people enter the mining field. However, as ASIC mining becomes more expensive, the rise of cloud computing may represent the future of mining. Furthermore, as encryption technology moves to cloud computing, it may accelerate the global energy transition to renewable energy by reducing energy consumption and harnessing the remaining renewable energy supply.
according to a Paper By Bitcoin Clean Energy Initiative, Bitcoin Mining Renewable energy could be supplemented in the future by storing excess energy from the mining process in batteries for later use.
Disclaimer: This article is for informational purposes only.It is not intended or intended to be used as legal, tax, investment, financial or other advice
