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Cryptocurrency mining has been a profitable craze over the past few years. At the same time, it has been creating a worldwide GPU shortage. In addition to this, Chinese markets have been accused of “trying to kill the GPU mining market once again cause they are greedy”.
GPU cryptocurrency mining kicked the bucket in 2013 and restored operation in 2015 with the development of cryptocurrency 2.0 applications inspired by Bitcoin. Cryptocurrency 2.0 applications take the underlying characteristics of Bitcoin and apply them to new things.
For years, GPU supplies have been slowly thinning and ASICS is leveraging this opportunity to construct an endangered habitat for GPU investments. With GPU-mined cryptocurrencies running on thin ice, altcoins using ASIC mining will likely experience cryptocurrency price pumps.
But according to Medium, the blockchain consensus mechanism – computation required for proof-of-work (PoW) – will eventually be replaced mechanisms that do not require equipment for specialised computer mining. In 2017, Ethereum released the ‘Byzantium’ blockchain software upgrade. The improvement was made to prepare the Ethereum network for a seamless replacement of the PoW mechanism with a PoS (proof-of-stake) mechanism. Hundreds of Ethereum mining investors around the world were alarmed by the change.
So the ultimate question remains, will cryptocurrency mining die? Will mining farms become fruitless?
The fearful end of cryptocurrency mining
Not too long ago, MyBroadBand hosted Coindirect’s Co-Founder and Chief Product Officer, Stephen Young, for an exclusive cryptocurrency Q&A on its Forum.
Forum member: “What are your thoughts on cryptocurrency mining; both in being a miner or joining a mining company please?”
Stephen Young: “Mining has become big business and there are significant advantages to economies of scale. This is one of the reasons we are seeing so much miner centralisation. If you want to take mining seriously you would need some serious network administration and data centre management skills. You also need access to very cheap electricity as the cost of power is the biggest expense for miners.”
While many cryptocurrency advocates continue to take interest in cryptocurrency mining, it’s clear that mining crypto is not getting any less complex or cheaper. Creators of the blockchain have also revealed that its engine is far from perfect running condition; for example, technical restrictions on systems promised by ICOs.
Here are other the factors impacting the life of cryptocurrency mining:
- Complexity – cryptocurrency mining algorithms are becoming harder to crack.
- Growth – the stability of cryptocurrency mining is dependent on the number of participants. GPU mining will soon fade and miners can now switch to PoS.
- Exchange rate – cryptocurrency prices are volatile in general but to continue profiting from cryptocurrency mining, the exchange rate of BTC and ETH to USD will need to rise as fast as the computing power of the network does.
- Energy – the energy being used to mine crypto is becoming redundant, as all mining prospects solve the same task and the return goes to one winner; after which the results of the rest gets thrown away.
- Expenses – the price of cryptocurrency mining hardware is at a premium rate due to high demand and low supply. The cost of mining power (electricity) does not come cheap either.
- Profits – Mining rigs using proper software, such as the Nvidia Geforce GTX 1080 ti card, costs around $1,300. This will only earn users a daily limit of $10 based on current cryptocurrency values. In essence, it will take months for the card to pay for itself; after which you will then only start profiting from cryptocurrency mining.
Though, GPU manufacturers are also pulling out of the cryptocurrency mining game due to unexpected low profits.
According to Coininsider, “Nvidia, the world’s foremost GPU manufacturer, has confirmed that it will no longer compete in cryptocurrency mining markets.” Furthermore, Nvidia Chief Financial Officer, Colette Kress, confirmed in a statement:
“We believe we’ve reached a normal period as we’re looking forward to essentially no cryptocurrency as we move forward. Our revenue outlook had anticipated cryptocurrency-specific products declining to approximately $100 million, while actual crypto-specific product revenue was $18 million, and we now expect a negligible contribution going forward.”
The December 2017 cryptocurrency rally saw thousands of investors building mining rigs at home. Nvidia was forced to counteract heavy demand by requesting retailers to create a reserve supply pool of graphics cards for gamers. With the manufacturer’s decline in GPU mining, low profits followed route. Since then, Nvidia’s stock price has stabilised. Similarly, Hashflare shut its mining operations throughout 2018 due to “a difficult time for the cryptocurrency market”.
Long Live Cryptocurrency Mining – on to Cryptocurrency Trading
The cryptocurrency bull run of 2017 generated much traction. But, it also created a mining upsurge that has resulted in a worldwide shortage of the computation components required to perform the mining.
Cryptocurrency mining may die, but Bitcoin and altcoins will not – at least not the cryptocurrency market’s top coins like Ethereum, Ripple, Litecoin, Bitcoin Cash and more. Once cryptocurrency mining dies, there will be other ways of getting your profits back on par.
One of the best ways to make money from cryptocurrency is through cryptocurrency exchanges and peer-to-peer marketplaces – Coindirect offers both under one platform.
- Cryptocurrency Exchange
Cryptocurrency can be traded in real time against other digital currencies. Coindirect’s cryptocurrency exchange lets users deposit fiat currency directly from their local bank account including bank transfers, PayPal, TransferWise, supported fiat deposits and M-Pesa. Credit card payments are coming soon.
Bitcoin and altcoin holders can securely profit from crypto by trading 15 different ETH, USDT, XRP, LTC, DASH, BCH and BTC trading pairs in 25 countries, including the United Kingdom, Canada, Australia, New Zealand, Singapore, Saudi Arabia, Malaysia, India, Pakistan, United Arab Emirates, South Africa, Nigeria, Kenya Ghana and many more.
- Peer-to-peer Marketplace
The Coindirect peer-to-peer marketplace allows its users to buy and sell cryptocurrency directly from and to local buyers and sellers at 0% fees, without having to convert. This means you will not incur any hidden fees. The peer-to-peer marketplace includes Bitcoin and over 40 altcoins, including ERC-20 coins.
Invest in Bitcoin and over 40 different altcoins to choose from. Access our integrated platform and #OwnTheFuture with Coindirect.
Disclaimer: This article should not be taken as financial advice. Never invest what you can’t afford to lose as the cryptocurrency market is volatile. Always research as much as possible before buying any coin.