Cryptocurrencies gained popularity all over the world as more and more people invest in cryptocurrencies. Also, the cryptocurrency boom of 2021 attracted interest from investors looking for how to profit from the nascent asset class. Besides, crypto mining was and is one of the most viable ways to participate in the upside of cryptocurrencies.
Inexperienced investors might not be aware of one interesting fact about mining. Interestingly, crypto miners’ computers compete by solving complex mathematical equations that help verify cryptocurrency transactions and update the shared ledger called the blockchain. Importantly, their reward for solving these problems is a share of the cryptocurrency that’s associated with the blockchain they are part of.
Still, crypto mining is not without current as well as future roadblocks. Unfortunately, it requires a lot of electricity. We can not ignore other problems as well. The government of China is not a big fan of mining. This year, miners fled the country after the government banned mining in some provinces. Another potential issue is the infrastructure bill. It proposed more stringent tax-reporting requirements for miners.
More importantly, mining is not a golden ticket to crypto riches. Miners have to take into account various factors such as electricity costs. In spite of challenges, mining could continue to grow as digital currencies stretch further into the mainstream. According to the global market research firm Technavio, the market for ASIC hardware and graphic processing units (GPUs) will grow by $2.80 billion at a compounded annual rate of more than 7% from 2020-2024.
Crypto mining and major cryptocurrencies
Mining the world’s most well-known cryptocurrency is one way to earn it at a potentially lower cost while participating in its upside.
The practice may bring to mind images of long LED-lit rows of computers, similar to the high-frequency trading systems that are out of the financial reach of most retail investors. However, these facilities stated above do not represent the full spectrum of bitcoin mining.
When it comes to crypto mining, we should not forget about ether. At the moment, it is the second-largest cryptocurrency in the world after bitcoin by market cap. The world’s second-largest cryptocurrency recently underwent a software upgrade called the London hard fork. It contained five Ethereum Improvement Proposals or code changes. The most important one for crypto miners was arguably EIP-1559. As a reminder, EIP-1559 mandated a minimum base fee that all users must pay to execute their transactions. As part of the new system, these base fees will be burned from the network instead of being rewarded to miners. To sum up, the upgrade means that ether miners, whose revenues surpassed that of bitcoin miners, will be paid less.
Apart from the cryptocurrencies mentioned above, there are other interesting cryptocurrencies as well. Let’s have a look at altcoin. Dason Thomas invested money in Antminer I3+. His equipment 12 Antminer I3+ that mine scrypt algorithms, a type of cryptography used in hashing various altcoins. Moreover, Dason Thomas has a mini dogecoin miner that he bought for $699. To sum up, people can make money without buying cryptocurrencies directly.