After the Bitcoin entered the market as the very first cryptocurrency back in 2009, many others have joined it. Now there are over a thousand different cryptocurrencies available on the market, and each one of them has something different to offer. The technology behind cryptocurrencies, the blockchain has made crypto mining possible in the first place.
That said, back in the day, the only way to get a cryptocoin was to either buy it or mine it. Simply put, mining is borrowing hardware to the blockchain ledger so that it can verify and record transactions more effectively. However, that was back in the day, but ten years have passed, and crypto mining is still a thing.
Nevertheless, people can’t help but wonder what the future holds for this activity. Now that Bitcoin is no longer the only option for miners, will they have to mine other currencies regardless or will the technology evolve to provide a different solution? With that in mind, here are a few things the future has in store for crypto mining.
Turning towards a greener solution
Up until now, mining crypto was mostly based on borrowing hardware. What’s more, the mining process required the “Proof of Work” (PoW) concept so that miners can actually participate in mining cryptocurrencies, as well as get rewarded for their contribution.
Given that this approach is solely based on extremely high energy consumption and power draw, it’s also considered the very opposite of eco-friendly. That’s why many cryptocurrencies and entire mining processes are shifting towards a greener solution called “Proof of Stake” (PoS).
Since the old PoW algorithm is being criticized for being energy-costly, many companies are simply ditching it for the PoS algorithm. This eco-friendly approach may revolutionize the mining process as we know it. The way the PoS system works is that it picks miners either randomly or based on a special system. There’s no reward aside from network fees. Ethereum is among the first cryptos to use the PoS system.
Mining costs skyrocket
Back in the day, mining cryptocurrencies was more or less seamless. While the blockchain ledger does require hardware to execute complex algorithms in order to verify, authorize and record transactions, the hardware didn’t have to be especially powerful, nor did it consume too much power.
Today, as more people become interested in cryptocurrencies, especially Bitcoin due to its high value, the mining process becomes much more demanding and more difficult. Nowadays, without powerful hardware, one shouldn’t even consider mining in the first place.
What’s more, the power draw from such hardware may easily outweigh the profits of mining. Fortunately, the only way to make the best out of cryptocurrency mining these days is to invest in a specially-designed mining rig. That way you can reduce the costs and actually enjoy the profits.
Many governments, such as China, Egypt and India have not only banned ICOs, but they’re also taxing the electricity to force mining activities out of their countries permanently. In other words, crypto mining will have to relocate to regions with cheap and stable electricity, as well as regions with favorable government environment for such activities.
The end of cloud mining
Since mining hardware is generally very expensive, not to mention the power consumption prices, people often opt for so-called cloud mining. Cloud mining means subscribing for hardware in the cloud where companies can do the mining for you.
However, this trend is slowly running out of interest. The main reason is that cloud mining is unable to provide investors with proper profits and is thus losing popularity. Poor ratings and services have caused investor outrage. Investors may never break even, and cloud mining companies may never recover from the scrutiny.
Some cloud mining companies, like ViaBTC, have already shut down their operations while other companies, such as Genesis Mining and HashFlare are soon to follow due to poor ratings. In a lot of cases, it’s not just the poor ratings that are plaguing the cloud mining companies but also the obsolete hardware that’s no longer capable of mining profitably.
The rise of pre-mined cryptos
Pre-mined cryptos might as well spell the end of crypto mining as we know it. Although this won’t happen any time soon, the rise or pre-mined cryptos is bound to reduce traditional mining drastically. Pre-mined cryptos are the new approach to coin distribution methodology for cryptocurrency networks.
Again, Ethereum is pioneering this new trend with 1500 different ICO developed by them that are also pre-mined. The way it works is that ICOs a pre-mined so that enough of them are accumulated for the crowd sales distribution. A lot of other cryptos are starting to follow this trend as well. The more popularity these pre-mined ICOs gain the more traditional mining processes will decrease in the future.
Mining crypto has become quite unprofitable today, especially for Bitcoin miners. High hardware prices and power consumption oftentimes top the profits. However, other cryptos are turning away from traditional mining processes and are exploring new approaches and methods. What will happen to mining is still unclear. We’ll just have to wait and see how the situation develops further.