The Future Of Mining Crypto

Table of Contents

Introduction

Today we will discuss on everything you need to know about The Future Of Mining Crypto.

Did you know that the mining landscape has changed drastically over the years to an evergreen solution?

Today I will break this down in the following way:

A brief summary of the situation currently
Answer some popular questions regarding the future of mining
Answer if it’s still worth it to try and do it with new or traditional methods

More specifically I will be talking about my personal experience with mining over the years. I started mining crypto back in 2016 when things were still relatively new and early. Getting ahold of a mining device required a lot of effort, high costs and long shipping times. I have done it all from buying ready made miners, building my own and even experimenting on writing my own code to mine and extending existing ones.

I believe I have vast experience in all the types of traditional and newer mining as I have invested a lot of money in them and have learned lot of things in the process. In this guide I will try to teach you what to avoid and not repeat my mistakes so you can hopefully learn and make something in the process if you are willing to put in the time.

One important thing to keep in mind is that mining is not what most people portray it to you as where you are going to sit back do nothing and reap the benefits. It’s actually a big investment in both time and money. If you think this is a get rich easy thing you are probably misinformed by all those people just posting stuff in social media and not actually following through. Anyone with actual experience will tell you the opposite, so read on and you will see why this may or may not be for you.

I have been working in the Software industry for over 23 years now and I have been a software architect, manager, developer and engineer. I am a machine learning and crypto enthusiast with emphasis in security. I have experience in various industries such as entertainment, broadcasting, healthcare, security, education, retail and finance.

Before continuing to read this article please take note that I am not a financial analyst and anything you read here is just my opinion. I’m not qualified in any way to predict the future of crypto as a professional. If you are serious about this please seek proper analysts that do this as a day time job. I’m merely a programmer that has a good understanding of how things behind the scenes and based on that I draw my own conclusions.

Is Mining Crypto Easy

When I spent my early days doing Crypto mining I think this was by far the least asked question that I received. People back then will just delve into it and start mining in some way and find their path along the way. The most important part on this is that back then mining and crypto in general where not very popular. Frankly only the real enthusiasts knew or even had heard about it. So I’d see a post here and there in a cipher-punk forums or general encryption and privacy enthusiasts.

Having said that things have vastly changed and now this is the first and most frequent question I receive from people. The reason this has changed in my opinion stems from the fact that these days a lot of people have heard about mining and it has gained a lot of popularity. But you may ask me how does this imply it’s a more common question now than back then? The answer is very simple, it’s a numbers game.

If that last statement confused you let me tell you why it’s a numbers game. Once you have a bigger mass of the population involved in an activity you attract all sorts of people to it. This means the background of people is more biodiverse and has different interests. This also implies that someone that has no idea on how to write software or even download and run a tool may still have interest in doing it, thus the question if it’s easy.

Offcourse the answer to it is very simple too, it depends on who you are and what background you have. If you are a technologist with basic knowledge of how things work at a networking level then you may have an easier way getting into crypto mining than someone that’s now starting to venture out to computers in general. For them it will be an uphill to familiarize themselves with concepts such as:

What is a hardware machine?
How does it connect to the internet?
How do you install mining software?
How do you maintain and manage it?

And the list goes on and on but that should be sufficient for you to get an idea of how difficult it can get. If you are a seasoned technologist you will not have a problem, if you are starting out it will not be easy. If you are somewhere in between the two, well then you may have a bit of a learning curve but you can do it.

Is Mining Crypto Legal

Depending on your country it may or may not be illegal. Since the laws are always changing please check with your local authorities before you start a crypto mining process. I will try to keep the lists below updated to the best I can.

Regions Crypto Mining is currently Legal:

Europe
US
South America

Mining cryptocurrencies is Illegal.

China
Iraq
Egypt
Morocco
Qatar
Oman
Algeria
Tunisia
Bangladesh

Please take note that some countries are in gray zones when it comes to allowing crypto mining and those are the ones you should be researching the most. You can find an article discussing some of this here if you would like more detailed information.

Does Crypto Mining Have a Future

This is a question that no one can answer to you with any certainty. What I’m going to try to do here is give you a risk profile on how I believe things will span out in the near future. Once you know the risks it’s up to you entirely to grade it and rank what you believe will be the case.

First we will start analyzing the existing landscape and talking about why I believe it’s still at a very early stage. I want to reference a graph borrowed from the chain analysis blog (which I think is a great resource you can find it here) that basically shows what groups have adopted crypto up to now.

As you can see there’s an important thing to note in this graph and I’ll explain in a bit why I think it’s important. There are very few to no large institutions that have gotten into the game yet. You’d very properly ask why is this important. Well if you check in history with Gold, Forex, Stocks they become mainstream when institutions or large institutions come into play. Before that there’s a group of people called early adapters which is usually individuals, retain and some smaller hedge funds.

These early adapters are usually higher risk profile people that either know something or they are ahead of their time. But this also signifies something very important that the crypto market is still at a very early stage even going into 2022. Now that we have established this fact we need to see if mining specifically in crypto has a future. So lets start by asking some of the common questions and figuring it out.

Before closing I’d like to introduce another graph again from that chain analysis blog post I referenced earlier which shows the curve of how crypto has been adopted.

As you can tell the graph looks flat at the beginning and after that we have an exponential growth. This goes to show you how much each country is getting into the game and offcourse mining goes in par with the adoption rate as well since one feeds and powers the other.

What Will Happen When All Bitcoins or Altcoins Get Mined

I believe this is probably the best and most targeted question when it comes to mining. Clearly there’s always going to be an upper limit of coins for most of the popular ones. But lets look into Bitcoin as an example but this applies to pretty much all of them. Once Bitcoin is completely mined, do note the difficulty will get very hard and mining will slow down extensively over the course of time but lets assume that all of the coins are mined. There’s still going to be a major need to verify the transactions. This takes processing power and it requires miners to do it. So to go back to our original question it’s a non-issue. Mining I believe will still be an important part of the Crypto ecosystem going forward.

Crypto Mining Requires a Lot of Energy

While this is true for coins such as Bitcoin which are very time consuming to operate and require a lot of money and energy to operate it’s not true for all coins. But for the sake of the conversation lets make a distinction in this point so we can better address the problem. We are going to split all crypto coins (very abruptly) into two main categories:

Crypto Coin Reserves: This includes all coins that have a high computational power and don’t offer a good solution for contracts such as Bitcoin, Litecoin etc. You can think of them similar to Gold, Silver etc. They hold a value and that’s it.
Regular coins: These are all the smart contract coins that are cheap to generate transactions in and scale very well. Some good examples are Cardano, Solana, XRP etc.

So now that we have split up the categories we can easily say that the energy costs are there but only for the coin reserves which I believe will become just that. No one is going to use them to implement real transactional data.

Newer Crypto Technologies

With the introduction of Etherium 2.0 and the general concept of proof of stake people are moving to a greener solution. The idea is that you stake your money and act as a guarantor for transactions. While this could see more improvements it’s already building up on the crypto decentralized concepts that already exist. I expect even more technologies to come into play and improve things better.

Is Mining Crypto Still Worth It / Is Crypto Mining Profitable

This has two sub sections and depends on which method of mining you are deciding to choose and how you help the network. If you are following the old approach which is proof of work there’s still a future but not for too long in my opinion

Is Proof of Work Profitable In 2022?

By far the most common and popular way of mining up to date is proof of work. As described earlier it’s easy to get started as long as you have the right equipment and can afford the electricity bills on starting to see returns. However there are some things that may affect the profitability for you that you need to take into account:

Increasing cost of hardware
Supply chain issues and delays
Increased cost of electricity
Taxes for electricity and county fees
Ever green laws affecting the usage of your electricity bills
Coin volatility, if you don’t liquidate your profits on time those may devalue over time

Is Proof of Stake Profitable In 2022?

Now lets see a proof of stake risk factor and if this can be profitable over time:

Network fees
Coin volatility
Locked in funds for prolonged period
Penalties for network faults or misconfigurations
Maintaining your nodes and infrastructure problems
Initial fund pre-investment capital

As you can tell both methods have their fair share of problems however with proof of stake you have much more control of what you can do with the situation than you can with proof of work. In my opinion proof of stake is also a much more green solution which means it will be favored with the new policies going in place in many countries.

What Is the Future of GPU CryptoCurrency Mining

One of the forms of proof of work is using GPUs to mine crypto currencies. More specifically the contract based coins such as Etherium do much better with GPU’s rather than ASICs or CPUs. Currently Etherium is a much better alternative than Bitcoin when it comes to smart contracts and since the future is headed there GPU mining will definitely have a place in the territory.

Also there’s a lot of etherium alternatives coming out such as Solana and Cardano which also offer similar functionality at much lower costs than Etherium which increases the landscape and the potential.

Conclusion

If you found The Future Of Mining Crypto useful and you think it may have helped you please drop me a cheer below I would appreciate it.

If you have any questions, comments please post them below I check periodically and try to answer them in the priority they come in. Also if you have any corrections please do let me know and I’ll update the article with new updates or mistakes I did.

Which mining method you think will prevail in the future?

My personal favorite is proof of stake, however I know this requires an upfront capital investment but I think it’s ever-green and will eventually prevail in the future. The old method is too resource consuming and environmentally unfriendly. Also with the taxes going up on electricity and the inflation hitting record highs it will become nearly unprofitable.

If you would like to learn more about Crypto related stuff, I have a few articles below: