What is cryptocurrency mining?
Cryptocurrency mining, or cryptomining, is a process in which various forms of cryptocurrency transactions are verified and added to the blockchain digital ledger. Also known as cryptocoin mining, altcoin mining, or Bitcoin mining. In other words, mining is simply a validation of transaction in cryptocurrency networks. Successful miners obtain new cryptocurrency as a reward.
ASUS Partners with Quantum Cloud to Develop Cloud Based Crypto-mining Platform
Asus recently announced a partnership with a blockchain startup Quantum Cloud to build a cloud-based cryptocurrency mining platform in a bid to promote the concept of giving incentives to gamers when they donate their GPU cycles. On its GPU product page, Asus explained:
“Quantum Cloud is a secure and simple service that allows users to easily earn extra cash when they donate their GPU cycles. Even if the app’s user interface is straight forward, it allows users to run cloud-based applications and make money in the process.”
Any incentive a user gets will be credited automatically to their PayPal account. The platform will secure the personal data of users as no data will be stored online. This platform is great and it is going to engage more people in the market. However, this isn’t the best time to debut such a product. The Cryptocurrency Market is currently at a low point. Making mining easier, and investing new ways to tap into GPU cycles would have been a great idea last year. Doing this at the end of a terrible year for cryptocurrencies isn’t such a great idea.
Bitcoin, the first largest cryptocurrency per market capitalization, fell as low as $3300 almost reaching the $3000 mark during this same period. This shows that the cryptocurrency fell by more than 75% from its all time high of $19,500. As a result of this record fall, purchase of Bitcoin dropped rapidly. Most people purchase other cryptocurrencies and convert it to Bitcoin whenever they have a need for it. So there will be no need for mining Bitcoin with GPU. These are the reasons why Asus’s plan is not a good thing for the industry.
It is a good way to think of cryptocurrency risks as investing in the stock market in the early 1929, when the government did not insure banks and investors lost millions of dollars. When Bitcoin was first introduced in 2009, mining the world’s first and premier cryptocurrency needed little more than a home PC — and not even a fast one at that. To make any kind of profit in it today, the barrier Is quite high. It’s no longer the homebrew industry it once was.
Just as it is the case with buying cryptocurrencies, mining comes with even greater risks. Nothing in the cryptocurrency market is guaranteed but the potential rewards are guaranteed.
There are risks involved when mining any cryptocurrency:
- Losing your digital wallet of coins: You can lose your wallet either by forgetting your password, which locks you out or by physically losing the wallet when your hard drive breaks or your online wallet provider goes out of business.
- Dishonest mining pool organizers: You have to be really wary of the kind of mining pool you join. If you join a mining pool run by unscrupulous administrators, they could skim coins from your earnings or take your earnings altogether and close shop.
- Electricity Cost: Costs of Electricity could make your mining unprofitable. For most mining computers, a cost of 14 cents/kilowatt hour is the most you want to pay. Mining above 14 cents for currencies such as Bitcoin, Litecoin, Peercoin, and Feathercoin are not worth the investment.
- Black Hat Hackers: There is a possibility of a talented hacker breaking into your mining pool to empty your wallets.
- Drop in value of cryptocurrency: Your cryptocurrency could drop in value just like gold or any other commodity. There is a chance that the market value of your cryptocoins will fall, and you will be sitting on top of a pile of pennies instead of a pile of dollars.
CRYPTOCURRENCY MINING IS NO LONGER PROFITABLE
Last year, the “mining” process of earning new cryptocurrencies using high-powered computers, then selling those digital assets, became a profitable side hustle for savvy entrepreneurs who set up the mining rigs in their basements and dorm rooms.
According to analysis by Susquehanna, the side hustle is no longer profitable if you’re mining ethereum using kits containing GPUs (graphics processing units). The profit per month is down for mining, from about $150 last summer to an estimated $0 for November of this year.
In mining, machines run 24 hours a day, competing against other computers around the world to solve complex math problems. The first computer, or multiple computers, to solve the problem earns a fixed amount of bitcoin or ethereum.
The “hashrate,” or speed at which a computer can complete that operation fell drastically for ethereum this year. A higher hashrate is better for miners and adds to the opportunity of finding the next “block” and therefore getting the reward of new cryptocurrency.
The value of ethereum meanwhile has dropped more than 70 percent this year, trading near $205 Tuesday, according to data from CoinDesk.
The combination of those factors means that mining ethereum using a GPU, Nvidia’s flagship graphics card, is no longer profitable.