There was once a time when an average personal computer would be considered good enough to mine a cryptocurrency. However, things have come a long way and today, crypto miners rely on ultra-powerful machines to get the job done. While mining crypto can still be incredibly profitable, there are challenges that modern-day miners have to encounter and overcome to see any monetary success.
In this post, we’ll take you through some of the biggest challenges that crypto miners face today, and how all of them can be conquered. So, without further ado, let’s get right into it!
photo credit: Rebcenter Moscow / Pixabay
1. Costs associated with high energy consumption
Even the most modest crypto mining rig consumes an incredible amount of energy. But if you want to mine the most hotly contested cryptocurrencies like Bitcoin and/or Ether, you’d need multiple application-specific integrated circuits or ASICs. In this scenario, the power output would be huge and you’ll be required to shell out a fortune in electricity fees. However, there are ways out of this conundrum:
Less power-intensive protocols
When it comes to mining crypto, miners can either choose a high power-intensive protocol or a low power-intensive protocol. While large-scale mining facilities can afford the former, if you’re an individual miner, you should ideally choose the latter. For example, Cardano and Ethereum are two cryptocurrencies that uses the Proof of Stake (PoS) consensus, a low power-intensive protocol.
Running activities on data centers
Crypto mining data centers are typically located in some of the world’s coldest regions. In these regions, the climatic conditions facilitate the reduction of costs associated with heat-dissipation. These data centers are also powered by renewable sources of energy, which is definitely a positive for the planet.
After all, crypto mining facilities using non-renewable energy sources have been heavily criticized for causing environmental degradation and contributing to climate change.
2. Security issues with hot storage
The cryptocurrency that you mine will need to be stored somewhere, right? This is where hot and cold storage options come into the equation. Hot storage options are the most popular for miners who want to store their mined crypto on a digital medium. However, hot storage comes with its fair share of security issues, i.e. if a hot storage is compromised, you might end up losing all the cryptocurrency you’ve mined.
To steer clear of the hot storage security challenges, we recommend storing your mined cryptocurrencies on physical storage devices aka cold storage. Sure, you might experience some inconvenience such as the lack of remote access, but if you’re willing to forego convenience for extra security, cold storage is ideal. However, you should be careful when carrying the storage devices with you, especially if the storage device is small. If you drop it somewhere, it’s very likely to be lost. It’s also prone to getting corrupted.
Before you invest in a storage option, be sure to research in advance so that your decision doesn’t cost you in the long run.
3. Cryptojacking
Cryptojacking is the act of stealing cryptocurrencies from another individual’s personal computer. While cryptojacking wasn’t a problem until a few years ago, today, it’s rampant. It has become worse in recent years because hackers have become more advanced in their ways. While there isn’t any security measure that can completely eliminate the risks associated with cryptojacking, there is one that can minimize them.
Digibyte’s blockchain platform utilizes hybrid protocol model, which features a combination of five protocols. Every protocol secures 20% of the platform, so even if one protocol is breached, the other four’s security will not be compromised. Hybrid protocol models also play their part in countering centralization, which is another major worry in the crypto market. After all, cryptocurrencies were designed to be decentralized, right?
4. Rising expenses
The overall expenses of setting up a crypto mining rig are skyrocketing because of the ever-increasing competition. Many individual miners are being tempted to go all out and buy multiple ASICs in the hope that their mining efforts will be rewarded. However, even those individuals often lose out, rendering their thousand-dollar investments unprofitable.
While the expenses are only set to go up from here on in, there’s a way around them. For starters, you could focus on mining cryptocurrencies that aren’t yet very expensive and competitive. Mining these cryptocurrencies require way less in terms of resources than the most powerful cryptocurrencies like Ether and Bitcoin.
Cover photo credit: Tiger Pixel / Flickr
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