Crypto Mining is itself a digital currency mining process. And like for any other digital industry, mining faces a number of difficulties. The task of each miner is to know about them, to be able to recognize and deal with them. Digital currency mining goes hand by hand with blockchain technology. This is the most innovative technology in the financial sector. Explaining in simple words blockchain technology as a kind of book that compiles information.
The technology is a string of blocks containing verified data, united by “hashes”. Therefore, to create a blockchain, data must be processed and verified. It is here that crypto miners connect, checking the data and receiving a reward for the crypto for this.
Mining can be an extremely profitable business, but you need to remember about the possible difficulties that may arise and try to minimize them.
Let's highlight 3 main challenges in the mining sphere:
First place - too high energy costs. We all know well, without electricity there is no mining. And prices per watt are now “biting” all over the world. In order to mine to the maximum you need to combine hundreds of ASICs to solve one problem. Therefore, this will require extremely high power output, which will cost you exorbitantly high electricity tariffs. There is evidence that the production of digital gold consumes more energy than 150 countries in common. But here are the possible solutions to this problem.
- Crypto miners can choose less energy-intensive protocols. One of them is the Proof of Stake (PoS) consensus, which protects networks with cryptography.
- To reduce costs, mining farms can use alternative energy sources, hydroelectric power plants, solar energy, and wind and sea tide energy for example. Many mining companies have already taken note of this idea.
Centralization rightfully takes the second place.
ASICs have proven their ability to exclusively mine specific cryptocurrencies. They are so powerful that after the release of ASIC, it is already extremely difficult to do without such equipment in the industry. Although this is a big development in the sphere itself, it is also perceived as a challenge. And since ASIC manufacturers are very few, the mining space will ultimately be centralized. However, there are two possible ways to solve this problem: decentralization of the production process of ASIC miners and the implementation of a new hashing algorithm that effectively removes all existing ASIC miners.
And the last point here - and no less important - vulnerability to hacker attacks. Besides creating a democratic space, the essence of decentralization is to ensure security, right? Well, hackers are becoming more sophisticated in using your resources. Mining pools have been exposed to cyber attacks more and more recently.
There is no universally accepted solution to solve this problem as such, but the PoS enhancement adopted by DigiByte, which uses a hybrid of five protocols on its blockchain platform, is a powerful tool that crypto miners can use to protect against this form of attack. Meanwhile, it is interesting to know that each protocol provides only 20 percent to protect the platform in this case. Thus, if one system is at risk, 80 percent remain unchanged. In the same way, this hybrid model helps to resist centralization. At any time, the miner will control only 20 percent of the network, even if he was responsible for 100 percent of the mining under this protocol.
In the end, I would like to note that any problems and challenges are created in order to successfully overcome them. And the more technologies improve, the more new opportunities arise. Everything is in your hands! Successful and safe mining for you!