Cryptocurrency mining has long been a pastime of many avid cryptocurrency fans. Issues surrounding mining have also become more common in the space, stemming from the rise of big industry players such as Bitmain. With mining not being profitable/possible on your CPU anymore and with mining equipment being rather expensive, is mining even decentralised at all these days?
Whilst profits in the cryptocurrency mining space have been reduced in the past year thanks to the collapse of crypto prices, there is still a distinct industry that has arisen since the creation of Bitcoin. You can yourself purchase cryptocurrency miners from companies such as Bitmain, but you must have some capital to make such a purchase as they don’t come cheap.
The hope is that through mining, you will be able to make a return on your investment. Sadly though, the steep entry price of buying a cryptocurrency miner coupled with the in-depth technical knowledge required is reducing the number of potential customers. If a regular consumer who has heard of Bitcoin but doesn’t know much about it can’t get involved, then is the system as decentralised as we would like to think? On top of this, the high entry price excludes many people from being able to purchase one, thereby rendering cryptocurrency mining a very particular niche.
Another factor in the decentralisation debate is the conglomerate of mining pools that have too much power over the network. This can in effect lead to forks in coins if the community decides against allowing such monopolisiation. Monero and Siacoin are two such communities that have forced hard forks to resist ASIC mining from companies such as Bitmain in an attempt to keep their networks decentralised. The downside is that this has reduced their hash rate, making their blockchains less secure.
The decentralised nature of cryptocurrencies is one of the most attractive aspects of the industry. The issue of mining is just one battle that will continue to rage on in the coming years. Whether cheap and available mining tools will arise for the regular Joe or Josephine though is another question. We can only hope.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.