Cryptocurrency mining involves employing high-powered computer systems to perform complex algorithms to release cryptos in circulation.
At this moment, the whole process poses serious challenges, threatening the future of many crypto coins. There has been little discussion on the mining challenges and their possible ways to mitigate them.
Now, straight to the point, let’s look at the significant challenges facing crypto mining operations and the target solutions.
High Energy Cost
The high cost of electricity is in no doubt topping the list of challenges in the crypto business. Like the case of mining Bitcoin, these power-intensive operations have seen many countries and states crying foul over the massive consumption of power.
For instance, Bitcoin mining alone can consume energy equivalent to more than 150 countries. That is super power-hungry.
The mining rigs run round-the-clock operations with cooling systems that also use massive electricity amounts. Building Crypto mining facilities Quebec outlets and other locations with the coolest climate will help to save energy and cut electricity costs.
From this massive electricity consumption, there is also an enormous threat to the global environment and climate. Carbon emission poses a real threat through worldwide warming and the release of carcinogenic agents.
But here are good options and probably the way forward.
- Cryptocurrency mining investors should set their mining facilities and data centers in locations where renewable energy sources are accessible. Of late, a rising number of private mining companies have developed their Crypto mining facilities in Quebec due to the lower electricity prices, thanks to the government-funded hydro-power plants.
- Mining investors can go for the Proof-of-Stake mechanism protocol as opposed to the famous PoW. PoS is less power-intensive and serves best in protecting the network through staking the coins. Notably, Cardano and Ethereum are the cryptos leading this paradigm shift.
It is important to note that having the Proo-of-Stake protocols in place won’t solve the centralization problem.
There has been a headache with sophisticated ASIC miners, which influences how ASIC manufacturers build these systems. Even though ASICs are more efficient, it is something to worry about for those still using GPUs and CPUs.
However, two possible solutions are in place. The first is to decentralize the processes of ASIC miners. And two, introduce new has algorithms that will render ASICs inappropriate.
Vulnerability to Cryptojacking
Cryptojacking is the unauthorized use of someone’s computer to perform cryptocurrency mining without their consent remotely. Cryptos, by their very nature, are decentralized and 100% electronic. Therefore, it would be almost impossible to recover or recourse after any hijacking event.
It’s advisable to be extra vigilant and aware of cyber-criminals who’re getting well sophisticated with improved malware systems. It is prudent to employ steps to help protect cryptocurrency mining from future threats and encryption challenges.
Miner Income Volatility
Another primary concern, rarely regarded as a challenge, is the economic viability of cryptocurrency mining in the long run. It has a worrying effect on miners themselves. But, since this is a factor to consider before investing in crypto-mining, it is worth being more patient than worrying.
Like any other significant investment, crypto mining is only worth it when rest assured of enough revenues to cover the initial and operating costs and enjoy good profit margins.
A possible solution could only be the centralization of these digital transactions. If governments successfully create their CBDCs or Central Bank Digital Currencies, there would be stability in exchanging cryptocurrencies.