Mining is the process of confirmation of cryptographic calculations required to form what can be referred to as blocks in cryptography.
It is these blocks that form the basis of the public ledger system where all transactions can be seen and the peer-to-peer transactions which make up what cryptocurrencies are.
It is in this process that transactions are verified and added to the public ledger system (especially in the case of bitcoin).
Specialized groups called miners always try to compete with each other to complete the various transactions which occur on the blockchain.
They use specialized hardware due to the nature of difficulty for completion of the equation required for the formation of a single block within the public ledger.
The equation is referred to as a hash.
The rate of completion of the hash is, of course, called the hash rate.
These miners form nodes which are used to be able to participate in the mining process.
Each Participant is paid a reward and this reward is the profit made.
Large scale infrastructure for confirmation of cryptographic transactions where cryptocurrencies are concerned is called mining farms.
They are known to consume a lot of power and the hash rate is calculated based on the number of kilowatt hours consumed.
Most individual miners join a mining pool in order to be able to turn a decent profit.
Different Options for Cryptocurrency Mining
When it comes to the mining of cryptocurrencies, there are four basic ways by which they can be mined.
The Mining App Method
In this method, an individual single user can start small and try to begin mining the cryptocurrency of his or her choice.
The disadvantage of this method is that the time taken to complete the calculation is more than the average human lifespan.
As such, it is best left to beginner enthusiasts in the fantastic new World of crypto to do this so that they can understand how the technology works.
When the hobbyist has now gained enough experience in the mining processor for those who just have an innate understanding of how the process works, using rigs to mine is by far the best approach if one were really to go into the business of mining.
The disadvantage also has to do with the difficulty of completing the calculation for a particular block.
This is why independent miners join a mining pool and complete blocks side by side. The profits made from the completion of the cryptographic block is shared according to the contribution of the computational power of the individual user who has a mining rig.
This process uses internet cloud infrastructure to be able to complete blocks. The hash rates of cloud mining are often cheaper due to the larger scale of the mining process.
The disadvantage of cloud mining also has to do with a reduced hash rate as well.
This is because most mining rigs (machines used for the cryptocurrency mining), use huge amounts of CPU power and most cloud servers don’t have Graphics processing Units which process larger amounts of data than ordinary CPUs.
GPUS are mostly the processing units found inside mining rigs.
Mining farms are infrastructure which is set up for the sole purpose of mining cryptocurrencies.
It is their major function to be able to do so at the best prices and in the most efficient ways.
Since the increase in the price of bitcoin and its subsequent popularity, many mining farms have come and gone for the simple fact that the founders of such farms did not take into account the use of technology in the mining process and how best to conserve energy as well.
Investors typically invest in mining contracts and they are paid returns on their investments based on the duration of the contract. This happens in both cloud mining and mining farms.
Advantages of Cryptocurrency Mining
If done correctly, cryptocurrency mining can indeed become a good and stable investment for the participants of the process.
The following points below depict several advantages to be gained from mining cryptocurrencies:
- Increased Turnover: When handled by experts who understand the business, cryptocurrency mining can give increased turnover for the investors. This is because of the volatile nature of the cryptocurrency market. Due to a lack of stability, the cryptocurrency market is one that increases in value faster than any other asset on earth.
- Faster return on investments: Cryptocurrency mining can provide faster returns on investments. Such returns, however, can also go south if handled wrongly.
- Store of Value: While a cryptocurrency may lose its value due to fluctuations in the marketplace, the equipment, and other hardware within the mining facility don’t lose value and may have other technological uses in the future.
- Little regulation: In regulated markets and assets, the regulator often times has the final say on who gets the asset, why, when and even how. The good thing about cryptocurrencies is that they have no central regulator. As such, their values are dictated strictly by the marketplace and not by any central controlling forces.
Disadvantages of Cryptocurrency Mining
Just like in any type of activity on earth, there are also disadvantages to the mining process. They are discussed below:
- High Energy Costs: Mining involves a lot of electricity. As such, the cost of operations goes up by the kilowatt hour. This is a major impediment to mining facility operators as they are not able to meet up with the price of the asset as against their operational costs.
- Market risk in the value of the cryptographic asset: Due to the volatile nature of the market, the value of the cryptographic asset being mined may not be able to meet the cost of operations of mining. This creates a dilemma where the operator is forced to shut down due to losses incurred.
- Security of Funds and Wallets: When it comes to Cryptocurrency mining, funds are often lost to hackers and other malicious entities and individuals who are able to penetrate the security systems of mining operations. This risk is always inherent when it comes to mining of cryptographic currencies.
- Incidence of Fraud: Due to the fact that cryptocurrencies are relatively new technology and the lack of regulatory oversight over them, the risk of investors in cryptocurrency mining operations getting defrauded is high. As such, many people don’t even know how best to differentiate between the genuine and the fake ones.
- Increased Regulatory Hurdles: Various Countries have now made it more difficult to start or run mining operations and this has made cryptocurrency mining to become even more high risk than usual.
Cryptocurrency Mining Done Right
Faced with various problems, such as scams, higher hash rates, and environmental problems among others, MinedBlock as a team decided to use another approach to cryptocurrency mining in order to get the most optimal outcome for all parties which will be involved in the mining process with their organization.
The following points below depict the features of the MinedBlock system:
- Rather than use contracts as the instrument of the transaction, preferred shares serve a long term, highest Value investment goal for the organization.
- Having a significant majority of the shareholders (the general public) own the token, (the ST20 MBTX) MinedBlock uses a Special Purpose Investment Vehicle (MinedBlock Holdings Limited) as the owner of the majority of the tokens which will be issued during its token generation event.
- The investors are expected to hold about 95% of the token while 5% will be held by the parent company MinedBlock Limited.
- Similarly, 75% of the mining services and profits generated from them will be held by the investors via the holding company and 25% will be held by the parent company for administration, maintenance and expansion purposes.
- The Parent company has vowed to ensure full transparency throughout the process and regular reporting to its shareholders as a part of the process is critical.
- Anyone who wants to sign up for the MinedBlock token event can do so but is subject to identification and verification of identity by the management of the parent company and her partners.
- Residents and citizens of certain jurisdictions are however subject to accreditation by the regulatory bodies within the jurisdiction of residence, E.g the United States and Canada where the Securities Regulators in both Countries must accredit investors as accredited and professional investors before such investments can be made. (7)
- MinedBlock Limited Aims to host its facility in Iceland and to ensure that operations are run smoothly. This is because Iceland is a cryptocurrency friendly nation in terms of its laws and the electricity and climate suits cryptocurrency mining as well.
- MinedBlock as a system aims to use the best customer service and support available worldwide. The management aims to ensure that these practices are in line with the best that any World-class organization can offer.
- MinedBlock also aims to mine a basket of different cryptocurrencies so as to maintain the value of the investments and also to employ green technologies when it is favorable to do so.
- The mining process for cryptocurrencies do not need to be complex. Plug and play allows for the mining farm to mine as many cryptocurrencies in the shortest time possible.
- Mined coins will be held in the best cold storage facilities and will use the best technologies available for security.
A Novel Approach to Cryptocurrency Mining
When compared to other approaches to cryptocurrency mining, the approach of MinedBlock as an organization makes it one of the excellent ways to go about it.
This is because using the approach of proper and effective corporate governance as a tool in ensuring the profits of the operation are consistent has worked in other business models and environments other than those of cryptocurrencies.
Taking from the real world and using an approach which will make ensure transparency, integrity, and results is a management method innovation which is laudable on the part of the management of MinedBlock Limited.
The consideration of investors as shareholders and willing participants in the long-term growth of the organization is what makes them stand out.
MinedBlock is a representation of a 21st Century approach to the management of digital and physical assets.
Cryptocurrency mining as a whole stand to benefit from the right kind of corporate governance process being implemented by the organization.
Furthermore, the minimization of risk using this model is also obvious.
Cryptocurrency mining as an activity just got a lot more exciting!
Article Creator: coffeelatte
Latest posts by QoinBook (see all)
- MinedBlock: A Novel Approach to Cryptocurrency Mining - May 18, 2019
- KABN Network: A Blockchain Integrated Financial Service Platform - May 1, 2019
- JAVVY: Providing a Universal Crypto Wallet for All - April 27, 2019