It’s fair to say it’s too early to throw in the towel, but more and more it seems like eventually small mining operations are going to stop all together. Why? Simply because it’s not a good business model to mine cryptocurrencies at a loss. No matter how much someone loves the tech, there is always a limit to how much punishment the pocket can take, and we are reaching that limit.
The good old Days
If you are new to crypto you’ve only heard about these mythical times, times when you could mine BTC using your laptop’s CPU, a time when a Raspberry PI setup was pragmatic and fascinating to implement. As a matter of fact, some setups looked like technological art, and I mean that sincerely.
Today however, even the mightiest of those rigs would not make the smallest of dents. In other words, the speed with which requirements for mining have increased as the difficult for mining has scaled, have far outpaced most conventional setups one can create at home.
Believe it or not, there was a time when an unimpressive CPU mining rig could still mine thousands of Bitcoins per week. An important detail however, BTC was only some cents back in those days, so mining these coins was not making anyone rich, at least not for those who never kept any or HODLed as we call it these days.
When GPU mining entered the scene it revived many enthusiastic spirits. All of the sudden it was possible to mine again, if not BTC directly or efficiently, an option that could be traded for your favorite crypto.
The space of mining has always been evolving and continues to do so today, the creation of mining pools made it possible for small miners to participate, the birth of mining marketplaces, like it’s the case with Nicehash revolutionized the way we see hash power, and all of the sudden everyone and their mother found themselves collecting a GPU or two for the idle times.
That being said the GPU mining era has also been expiring you could say, and the reasons are pretty obvious for anyone who has been paying attention to the numbers. The difficulty levels of most crypto projects have skyrocketed while at the same time, the bear market has been testing our levels of commitment as well.
It’s easy to see that this is the case today. Taking a peek into ebay, or craigslist will show you hundred of people selling video cards, and sometimes complex mining rigs that they’ve decided to shutdown. With the exception of the most commited of them all, or the ones who get free electricity (they do exist), most hobby miners have ceased operations.
Let’s not Forget ASICS
You may be asking yourself the obvious question. Why has difficulty increased so much? The answer is nuanced, complex, but it can be attributed with a lot of weight to the introduction of ASIC miners into the mix.
Miners are nothing more than specialized computers that can only do one thing. In other words, they can only mine a certain coin, with a certain algorithm, but they do it with extreme efficiency. The problem however is that when a new ASIC miner is launched into the market by Bitmain or one of it’s competitors, the effects it has on the network they are designed to mine are always the same, thus predictable.
They will increase the rewards for the early adopters, and as more and more jump in, reduce the rewards by increasing the difficulty on the network, while at the same time leaving all of those who did not jump into the ASIC completely behind. In other words, a race against obsolescence.
The word is not misused her, because literally a miner that went for thousands of dollars a year ago, is nothing more than deadweight today. Imagine buying a computer, a laptop for that matter with a 6,7 month expiration date. Doesn’t sound like a good investment to me, but some people love the gamble.
We are transitioning
And in actuality, we have been for a long time. The introduction of other methods to achieve consensus is nothing new, but it seemed like when they were introduced, people saw them as options and today they seem to be the only way forward.
Starting with POS(Proof of Stake) and later DPOS(Delegated Proof of Stake) the answer seems to be staring us right in the face. How long can we keep on making these disposable machines? How long can we keep on running at a loss because we love the ethos, the tech? I submit to you that everyone has a limit, and I think it’s reasonable for people to elect to shut their miners down.
A youtuber that I’ve been following for almost a year now recently made a video that I think illustrates the points I’m making perfectly, and as you might imagine, his perspective made me think about this inevitable change we are experiencing.
It all comes down to scalability
And that has always been the challenge here. How do we go mainstream without requiring quantum computing? It’s obvious, by switching lanes, by not playing the 1 BILLION terahash game we seem to be so eager to partake of.
I suspect this challenge will end up killing a lot of unprepared projects, all the ones that don’t enjoy of a solid development team or community to take them across the pond of such a massive change. But of course, this is just speculation from my part.
We know Ethereum is already working on this, and their Constantinople fork is in my view a confirmation of precisely what I’m talking about, as much as that might anger a hardcore crypto miner.
All this to say that this is one of the main reasons why I believe that graphene platforms like: STEEM, EOS, Bitshares, and even the new projects popping up like it’s the case of Whaleshares, are already ahead of the game by a long shot.