Mining cryptocurrencies is a process in which new coins are released to a network by solving numerical problems. It is similar to other mining processes such as data mining, gold mining, and it comes with a set of challenges.
If you’re new to the crypto space, here are some brief ideas about cryptocurrencies and blockchain for your knowledge.
- Cryptocurrencies: Cryptocurrencies are a form of digital currency that works through blockchain technology. They have become popular due to many potential benefits as a liberal financial system and high-return investment assets.
- Blockchain technology: Blockchain technology is a peer-to-peer distributed ledger that allows making transactions without a central authority. More precisely, blockchain is a network where verified data (mainly processed transactions) are stored permanently. This is where crypto miners’ role comes into the picture; they verify the processed data and get rewards in crypto tokens.
In this article, I am going to share the five major challenges that miners face while mining cryptocurrencies.
Major Challenges of Crypto Mining
Initially, it was relatively easier to mine cryptocurrencies through personal computers. But, things have changed now; you can’t compete with the high processing computers that miners are using today with your personal computer. Apart from this, here are the five major challenges of crypto mining.
- Increase in Difficulty of Numerical Problems
- High Power Consumption
- Fear of Getting No Rewards
- Vulnerable to Ransomware Attack
- Threat of Centralization
If you are serious about crypto mining, then read the full article in detail. It will help you to get ready with the setup and preparation to overcome the challenges.
Increase in Difficulty of Numerical Problems
The first major challenge of crypto mining is the complexity of numerical problems is increasing. With the rising number of crypto miners, the numerical problems are becoming more complex. Further, every crypto tokens have their own block time. For this, you need high processing devices like an application-specific integrated circuit (ASIC) to solve these problems.
High Power Consumption
Secondly, another major problem with crypto mining is that you have to pay high eclectic fees. As the competition is growing, it requires multiple high processing ASIC devices. These devices consume high power resulting in high electric supply cost.
In the worst case, if the cost of mining is more than you earn the rewards, you will be in loss. All your effort, time, and money will go in vain.
Fear of Getting No Rewards
You may have verified the transactions, but still, you may not get any rewards. You need to satisfy these two conditions for earning rewards.
- You have to solve a particular amount of transactions (transactions of 1 MB data for bitcoin)
- You need to be the first miner to solve the computational problem for getting the rewards.
Due to the rise in competition, it creates fear of not getting any reward even after verifying transactions is also a major challenge.
Vulnerable to Ransomware Attack
The ransomware attack is a tactic hackers use to use your computer remotely. So there is a high probability that cybercriminals can use your ASIC system to mine cryptocurrencies remotely. However, there is no conventional way to tackle this problem, but special software can block them.
Threat of Centralization
Last but not least, there is a threat of centralization. And the main reason behind this is, the numbers of decentralized ASIC systems are very limited. ASIC has proven to be a powerful tool that can solve computational problems. Eventually, the crypto mining space may become centralized.
If you want to earn digital tokens and voting power, then prepare to overcome the above challenges. However, you can also earn crypto coins by investing in them like this App. It is a free and secure platform for trading bitcoin and other cryptocurrencies.
Remember, cryptocurrencies are highly volatile digital assets and involve high risks, so make sure you understand them before investing in them. I hope the above information has helped you to understand the major challenges of cryptocurrency mining. Lastly, don’t forget to ask your queries and please leave your comments below.