Bitcoins and several other cryptocurrencies come into existence when miners solve complex algorithms and new blocks are added to the blockchain. Cryptocurrency mining rewards the miners with new coins for solving the complex problems. They can trade these coins on the crypto exchanges or hold them as a long-term investment.
Here are 5 interesting facts about cryptocurrency mining:
Fact 1. Cryptocurrency mining is expensive
You need powerful processors that need a lot more electricity than the average computers to solve complex problems. The energy consumption to mine cryptocurrencies like Bitcoin will continue to grow. Moreover, the block rewards are not as high as they were initially.
Fact 2. Cryptocurrency mining causes pollution
Bitcoin mining needs enormous amounts of electricity and corresponds to 20 megatonnes of emission of CO2 each year. This is roughly equal to one million transatlantic flights.
Fact 3. Alternate methods of cryptocurrency mining
Bitcoin and many other cryptocurrencies use the ‘Proof of Work’ mining algorithm that requires miners to solve problems and needs a lot of power. There is an alternate method called ‘Proof of Stake’ that does not need too much power and it is an eco-friendly way of mining the cryptocurrencies.
Fact 4. Network alterations
Computer scientists and developers are considering other methods to mine the cryptocurrencies by shifting the computing outside the network. By using the lightning network for peer-to-peer mining will put less strain on the network.
Fact 5. First cryptocurrency was mined in January 2009
The first cryptocurrency, Bitcoin, was mined on January 3rd, 2009 when the creator of Bitcoin, Satoshi Nakamoto mined the genesis block of the cryptocurrency that rewarded him 50 BTC.
In summary, cryptocurrencies can make global trade faster and act as the perfect tool to power the fourth industrial revolution. They can support the commerce based on advanced technologies like IoT(Internet of Things), AI(Artificial Intelligence), etc. but there are huge environmental costs associated with them.
However, scientists are working hard to make the cryptocurrencies greener so that we can continue to use them without harming the environment. Generally, cryptocurrency mining can be profitable for you only if you are one of the early miners as the cost of mining increases and rewards for mining decrease over time.