Is mining on the way out?

in cryptocurrency •  6 months ago

I’ve been thinking for a long time that the future of cryptocurrencies is going to be quite different that what we are seeing today. Without a doubt, the way cryptos work and operate is still not easy enough for it to become mainstream. However, I’m able to look back and appreciate objectively how far the technology has progressed within the two years that I’ve been participating of it.



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Mining will probably disappear


Or in the very least it will be extremely rare. Looking at the tendency of the markets, and the people who maintain the networks, it seems obvious to me that we are reaching a crucial point of optimization.

I won’t bore anyone with numbers as it might be not very entertaining, but as much as cryptocurrencies are a fantastic technology, they are still not able to process the required transactions to “take over” our economic system.

This is the case for all cryptos, including Steem, being Steem the one who is at the forefront in speed and capacity. This is one of the reasons why I believe in this project and blockchain so dearly.

Proof of Stake will Rule


This seems very likely, the energy requirements of bloated blockchains are making it close to impossible for miners to stay profitable. Let's be honest, if mining Bitcoin ever becomes unprofitable for miners, then we can rest assured the blockchain will fail.

It’s exactly because of this reason I’m confident that in the future most cryptocurrencies won’t be mined with any algorithm per say, but rather staked.

I’ve been reading about masternodes


They are not a new thing, not by a long shot, but they seem to be a great way to lever one's holdings. Specially, since the current crypto market seems to act as if its testing our emotional fortitude, I think I’m going to explore some of the popular offerings.

And it's because of the reading I’ve been doing in the past few days, that I’m wondering what other Steemians are currently exploring. I’ve seen a few good posts about SmartCash, and a not so great Post on Pivx, being Pivx one that does not interest me too much I should say.

As the old saying goes: “What’s the word on the street these days?”

Hope everyone is having a beautiful friday

@chbartist

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That's a reality mentioning that you are talking about you I really like this article

Public blockchains often face scalability issues. To tackle these issues, some blockchains (such as Lisk, EOS, Steem, BitShares and Ark) have adopted the Delegated Proof of Stake (DPoS) consensus mechanism. DPoS seeks to by speed up transactions and block creation, while not compromising the decentralized incentive structure at the heart of the blockchain.

Steem to the moon

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Delegated Proof of Stake (DPoS)

seems to me the best tech out there, and probably the right move forward for blockchain.

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by far !!!!! dpos is the future!!!!!

Great article!

if mining Bitcoin ever becomes unprofitable for miners, then we can rest assured the blockchain will fail.
From my understanding, Bitcoin's automatic difficulty regulation kind of handles this. If we assume that nobody will mine if it's not profitable, the mining difficulty will simply decrease when the number of miners decrease, thus increasing the profitability for those still mining. If Bitcoin's mining difficulty is updated about every two weeks, then mining would go back to being barely profitable every two weeks. If on the other hand, people keep mining even when it's not profitable in the hope that the price of Bitcoin will increase in the future, then I guess there isn't even a problem (yet). The only problem I see is if people mine unprofitably for too long and suddenly stop mining at the same time. Then the difficulty would remain high until the new difficulty update, but since the current difficulty is based on the previous period's time, the blockchain might be super slow for a long time, because the few miners take too long to generate enough blocks to reach the new update. Also, since the difficulty can only be adjusted by a certain amount for each period, the difficulty decrease might not be able to keep up with the decreasing amount of miners. I don't think this will kill blockchain, but it may give long periods of slowness.
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thank you I was thinking of buying one

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Yeah when the operation of mining becomes unprofitable, Bitcoin's automation of increasing and decreasing the difficulty will be like a dog chasing its tale for miners.

If the blockchain fails, what does it really mean?

Let's be honest, if mining Bitcoin ever becomes unprofitable for miners, then we can rest assured the blockchain will fail.

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There would still be endless amounts of opportunity for many other projects to fix what made Bitcoin fail. Blockchain will never fail because blockchain is an idea.

I'm good with staking, it's a lot easier for the average guy, and believe me, I'm very average, lol.

Hmmm. Very interesting post with thought provoking content @chbartist. As a Metallurgical Engineer, who spent 20 years in the mining industry, I would like to comment.

... the way cryptos work and operate is still not easy enough for it to become mainstream ...

Yes. agreed. And this is exactly what attracted me to this whole asset class to begin with, when researching whether or not to become a "crypto" investor. I was fascinated by the concept of bitcoin being "virtual gold."

So, here is a question. If it was "easy" to find and mine gold, would not then everyone would have a "boatload?" And, therefore, we would find it's value greatly diminished? To the point of near worthlessness?

Would any of us argue the original concept behind the creation of bitcoin was brilliant? To the point the technology spawned from it is still in its "infancy" in transforming the way we live? A critical part of the original concept, to me, was taking steps to ensure there would never be more than a finite amount. And, then just like gold "in the real world," it would become harder and harder to "find" whatever gold had yet to be discovered. Again, absolutely brilliant to come up with a virtual recreation of what we find in nature!!

That said, you bring up an excellent pragmatic, "real world" aspect of carrying this idea to its logical conclusion. The pure cost of mining. So ... Is that truly a problem?

...Let's be honest, if mining Bitcoin ever becomes unprofitable for miners, then we can rest assured the blockchain will fail.

Not sure I can agree with your point / concern here @chbartist. It begs the obvious logical (to me) question. If mining ceased altogether, what would become of the bitcoin already "in existence?" Would it "disappear?"

I make no profession of being a "crypto wizard," but this makes no sense to me. Would not what has already been "mined" still be "around" and supported by the blockchain's ledger? If the answer is "no," then I would sure like to be enlightened on why ...

Again, from my background, it makes perfect sense, depending upon the market for bitcoin (or any other similarly designed crypto), that mining would cease at times when it became unprofitable. And start up again when the price made mining more attractive. To what degree would it be "attractive?" Well, that is the great power of free markets and the individual exercise of our free wills, which I for one passionately support ...

Hope this doesn't come across as critical @chbartist. Not my intention. Just "competing in the marketplace of ideas," along with everyone else in our great, new Steem Community.

Again, I really appreciate the thought provoking content. I have upvoted it and am now following you! 👍 😊

On the move ... Posted using Partiko Android

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I appreciate your comment @roleerob I like different perspectives, and trust me I take none of what you said as critical. this is not a one way conversation, because it if it was, it would not be a conversation after all.

I agree with your points, and maybe your thoughts are more balanced than my own.

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Thank you for your prompt response @chbartist. And heartened to hear you did not take my comments as critical.

Let's see what other comments may "come in" on your post, as we should all benefit from good intentions in discussions focused on this important issue for us all.

Have a great day (night)! 👍

On the move ... Posted using Partiko Android

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It's my understanding that mining is in part, the processing of the transaction so if mining ceased altogether the Bitcoins would still exist but you wouldn't be able to use them until someone started mining again.

IMHO, as long as you can mine on a standard desktop computer you will always have somebody using their office (employers) computer and electricity to mine for "free". I know you can't mine BTC on a standard PC anymore but you can mine XMR and others.

Of course this does nothing for the electrical cost of mining, that is still an issue. I am concerned with the projections that I have seen on the amount of electricity that it will take to mine cryptos in the future. That is something we need to look at. "Save the GPU"

POW may not totally go away but agree POS is better. The potential with POS is huge has even in staking there are different forms. Your mention of smartcash and Pivx each have different ways to stake and earn more of its coin. The potentials are much more than that of POW.

It does seem like Proof of Stake is a lot better. #energyconsumption

"...the current crypto market seems to act as if its testing our emotional fortitude..."

That's so true, the last 6 months we're tough to widthstand mentally. The only thing that made me hodl is because of the general goal of cryptocurrencies.

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the only thing that made me HODL was I would lose my shirt if I didn't

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You gonna sell your shirt? Lmao

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thats a stupid reason.

Hopefully! The amount of electricity being consumed by miners is growing to enormous amounts. It will not be scalable forever

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unless we aquire the power of the sun!
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which will eventually die out thus rendering my first statement irrelevant :(

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wind and hydro-electric are the most viable, solar is good too.

Mining does not add much real value to the process so as a matter of expediency and necessity it will eventually be replaced by technologically superior alternatives, starting with staking.

I do mining with two computers and 3 VGAs.
I also do Proof of Stake.
I think it´s the combination of both.

Maybe it will change due to higher difficulty...

But Proof of Stake will always work.

upvoted and resteemed

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Where do you live? I am assuming that your electricity price is very low.

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I live in Germany.
But I have a rented office and there is a flatrate for electricity :-D

The problem with proof of stake is you can validate multiple chains with the same stake. Mining will always be there though it may be more about tech r&d than electricity cost. There also might only be one mined coin with others linking to it.

mining will go further difficulty level..

I heard one guy say the the energy invested in computational power to mine bitcoin is coming close to outweighing the profits. When the electric bills cost more than the coins you mine, the choking point will be reached. We will definitely have to come up with alternate models or proofs. Though it made the GPU makers a lot of scratch :)

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Exactly! the GPU makers stand a huge advantage in the mining game

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Wow! yeah, I was right. Bitcoin is definitely not a green currency by any stretch. That's a lot of burned fossil fuels and KWH, when you consider Iceland is saying the whole country cant supply enough power to run the industry they fear is coming. I would say that if you care about the environment, find a cleaner crypto. It also tells me that all that green philosophy everybody spouts is total BS when there's money to be made.

You know another thing I was told was that the supply of Bitcoins was finite. There is a set number of them that can be mined. Maybe that's when this will all end for them. GPU's will get cheap again lol.

Mining, will it dissapear or stay alive a little longer or forever is irrelevant, even with the "high cost" of electricty the production of the bitcoin is way cheaper than the production cost of the dollar banknote, to make a dollar you need to plant cotton in big countrysides and usually deforestating the environment, without considering the processing cost or transport. In other hand what is the cost for mining a cryptocurrency? Just electricty? One of the cheapest resources? Which we got a lot of quantity and everyday is getting cleaner and more sustainable, well I would prefer using cryptocurrency by far, but usually people get lied by the media. Although there are alternatives like IOTA, which dont depend on miners and they are giving something really exciting. IOTA PoW is done in ternary. This means, that you cannot natively perform that PoW on any existing CPU or GPUs. That PoW needs to be emulated, which drastically degredates the performance.

They are creating JINN chips specifically for this, which will be a fraction of the price of a GPU and will outperform the best gaming rigs.

So, in the short term the fastest binary processors and GPUs will be the best.

In the long term, anything that is out in tye market now will be out performed by a $50 JINN processor.
This is really a paradigm shift for hardware as well.

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I'm going to research these JINN processors, first time I hear of them, thanks for sharing.

SmartCash is really great ! I have been following the project since last October and the Hive team is really proficient. You will find a lot of useful information on the website. Joining the Discord is a really nice way to see what is going on on a day-to-day basis. You will also find some nice posts here on steemit with the smartcash tag.

Masternodes are impressive indeed. I read an article today that William Shatner is endorsing a solar powered mining operation in Illinois. I think mining will be around for the long haul personally.

Hi @chbartist, i perfectly agree with you, now mining profit is going so down that soon will disappear, because as i wrote in my post, https://steemit.com/cryptocurrency/@intellihandling/hashflare-is-making-shit , the people will not invest their money with such situation. Till three months ago everybody say they are the best cloud mining company...

is cloud mining is good ??

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It's very expensive for the hashes they are offering. Currently hardware prices are pretty ridiculous too though.

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I think cloud mining is a bit of a gamble. My opinion is that its best to stay away from those things... anything that has referrals, and pushes referrals aggressively should scream red flag for us.

I like POS and in my opinion trust for wallet with long term is very good option to mine coins in POS. At the moment Bitcoin is the 1st coin and probably in 1-2 years nothing is change, so we will see where we go :)

Thanks for your article.

I don’t really understand the underpinnings of crypto much, I do understand a bit and I have been involved to a degree in buying and selling for a year or so. I think I am go to start doing a bit of intensive reading on the subject in the not too distant future.

I have a question about your article. You said that if mining bitcoin becomes unprofitable, due to energy requirements of bloated blockchains, then the blockchain will fail. Then you state that future coins may perhaps be staked.

My question is do you mean bitcoin will fail or the blockchain concept for crypto itself will fail if mining becomes unprofitable? Do you thin Peercoin is good?

Thanks for the article once again.

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Ive not done enough research on Peercoin to have a good take on it, but I will read up on it..

Cheers

Crypto has apparently changed and being mainstream has make me with no crypto background participate in just a few weeks back. Of course, if Bitcoin fails, our currency would be inevitably affected because we're too much BTC dependent but just like @ishaan1986 had just said, I also think mining would get further difficult. Great post @chbartist. Yeah, my day was so nice and I hope you also had a nice Friday.

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As always nice to see you commenting on the blog, cheers @tobah all the best

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Have a nice week!

PoW, PoS, DPoS, PoSW, PoA, PoWeight, all of these are still mining. they are just different consensus algorithms

Sure the crypto curnncny will go forward and as well people will do mining as they believe more in crypto than banking now

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Interesting topic. The cryptos are clearly in a bear market at present and I'm not keen on them. I hope Steemit still keeps going despite this. As the cryptos decrease inevitable there will reach a point where it is unprofitable for miners. Although as more drop out at some point it will become profitable again. Like all markets now - this one too is being manipulated. However, I think your point is central - going forward as confidence will be lost in fiat currency - will people turn to cryptos??? Is the technology ready???

So much for the decentralized utopia all the fanboys promised.

Even though mining might be more costly than staking, an ASIC free PoW blockchain still seems more decentralized and equitative to me, than PoS, since it allows anyone to mine with consumer-grade hardware and without the need of owning a lot of that cryptocurrency. Still, I prefer PoS than PoW with ASICs. ASICs are the cancer of decentralization.

after some time mining is not profittable.

To the question in your title, my Magic 8-Ball says:

Outlook good

Hi! I'm a bot, and this answer was posted automatically. Check this post out for more information.

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funny enough, i have no objection to the bot's answer.. kkkk

good project but tell me full cost on this

it looks really awesome when you post ...thanks

I was thinking the same thing. Mining is already pointless unless you have an insane rig. Also so many coins will be phased out, only certain coins/tokens will survive and eventually mining will become so unprofitable people won't do it as much.

now a days mining is not profitable as compare to previous years.

The difficulty for mining will increase with time.

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Excellent work friend @chbartist from @Venezuela always supporting your post, I learned a lot thanks to your work ... Congratulations is still men ...

very interesting

<This seems very likely, the energy requirements of bloated blockchains are making it close to impossible for miners to stay profitable.>

This is absolutely not true, Bitcoin's network hashrate is growing continuously and has made near x10 since last year, we don't see how miners should continue to mine on an unprofitable chain. Mining difficulty adjust itself according to network hashrate to maintain constant block time extraction: the more is the hashrate, the higher difficulty will be and vice versa.

<Let's be honest, if mining Bitcoin ever becomes unprofitable for miners, then we can rest assured the blockchain will fail.>

This is the whole point on which blockchain relies on: the economic incentives are the basis of cryptoeconomy, even in PoS if token holders decide to not stake their tokens because it's not so profitable, then the corresponding blockchain will fail. Until now PoW has shown a lot of strenghts in terms of security and resiliency (if the network is big enough to make attacks too much expensive), as such as weaknesses in terms of resources wastage. PoS on the other hand is not expensive in terms of resources but there are trade-offs regarding decentralisation and security, which are main features of blockchain itself.

Best,
Black Swan

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I agree!

I don't think mining is gone forever. it's time to boom.

Proof of Work will still be relevant. At least with bitcoin and I do not see that changing any time soon. Proof of Stake is okay but only time will tell how succesful it can be.

Взаимный голос

U r right

Rerally ypu are creative mind set person

nice information

blockchain will change to world

Quantum Computing will end the blockchain as we know it. You can read the new TOS of Steemit and see what I'm talking about. Unless the blockchain adopts a Quantum Proof technology, it's just a matter of time that private keys are decrypted and accounts emptied bringing the value of cryptos to zero. Mining will be irrelevant as well.

Cheers

@greencross

Interesting analysis @chbartist but I do not agree at all. However, future is comming, lets see what happens. Great post by the way!!

Congratulations @chbartist!
Your post was mentioned in the Steemit Hit Parade in the following category:

  • Pending payout - Ranked 1 with $ 662,25

Good post. I agree POS will rule but some chains will intentionally stay with POW simply because they prefer it. Thanks for the info

Mining Bitcoin may not be profitable at current BTC price but historically it is very volatile asset. It may hit 20,000$ mark again or even surpass it.

Very good you have great knowledge about crypto currency.

Very good you have great knowledge about crypto currency.

Very good you have great knowledge about crypto currency.

thanks for the interesting post. The amount of electricity being consumed by miners is growing to enormous amounts.which will not be scaled forever

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This is the case for all cryptos, including Steem, being Steem the one who is at the forefront in speed and capacity. This is one of the reasons why I believe in this project and blockchain so dearly...
i also believe this project..

Yep it looks like one possibility is digital currency could parallel the history of physical currency. Bitcoin and a few others are metals that require investment and are statistically limited in supply. Other currency provide reasonable inflation and liquidity. They will be measured against bitcoin. Ultimately we need to get away from the idea that money (physical or digital) is a necessary invention for society. Tokenizing everything of value to the point there is indistinguishable lines between individual and societal wealth could mean almost perfect barter where people do what they do best without penalty.

Mining will definitely die out. It uses way to much electricity, its not scalable, it gets harder to mine coins and on top of all of that it makes the whole thing more centralized.

not entirely, it can be more optimized on the future. Sincerely I thinked that green solutions like as burstcoin that use proof of capacity get more success than now, however now there are a lot of new algos with new concepts.
Recently the born of "proof of concept" (rif. https://cointelegraph.com/news/cebit-18-iota-and-volkswagen-present-proof-of-concept-for-autonomous-cars)
or also "proof of play" and lot of more....

Hopefully! The amount of electricity being consumed by miners is growing to enormous amounts. It will not be scalable forever...
It will not be scalable thats i m sure...
thanks for share

I expect that mining contracts will be profitable for some time. This is because mining companies have scale and efficiency that most people can't replicate at home. I'm sure some fringe coins could still become profitable at various times. Everyone needs to keep their ear to the ground so to speak

I would actually love to see some numbers and calculations about the whole mining thing.

interesting post but the fact is mining bitcoin or any cryptocurrency is not that easy now a days as u know its difficulty level is increasing day by day

Great discussion @chbartist.

In my opinion, as you alluded to, proof-of-work will always be central to the Bitcoin network as it is the only way to maintain true censorship resistance.

Now that the SEC has unofficially declared Ethereum “not a security”, even though it was initially sold as a security, I would be surprised if it moved to proof-of-stake because this will likely reduce it's decentralisation and put it back in the regulators' firing line.

That being said, the planet can probably only support one proof-of-work cryptocurrency so we'll have to see what happens. On a side note, Bitcoin mining will likely result in increased use of renewable energy and efficiency (to increase profitability) so this may change things.

Like you say, though, proof-of-stake works well for networks like the Steem network and those that don't face as much pressure from governments and regulators.

hey great post you give great info and come to my channel moneymantra you will get latest updates on it

i have 50 coin .

No it's not and was not every other time people were asking this dumb question

In cities like maracaibo people should be looking some alternative energies, because is a reality the amount of electricity being consumed by miners is growing, mining could be an alternative in the actual future, but we need try to work in alliance with the environment and community

good selection mate

PoI (proof of importance) like in NEM dlt will rule. It is a more advanced version of PoS (proof of stake)

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Enegy consumption is too high. Mining is simply a reward system built for crypto. Masternodes are the next best thing and other systems will emerge.

Yes it is my friend.
Delegated Proof of Stake will change to whole industry.
Look at Bitshares and Steemit they now proces more than 70% of the whole crypto industry.
With EOS this percentage will increase even more.

This post has received a 36.35 % upvote from @boomerang.

Fantastic article! I voted and followed you. Best of luck to you on Steemit!

i think that mining will not die it will recover with new methods

s ago
Hopefully! The amount of electricity being consumed by miners is growing to enormous amounts. It will not be scalable forever..

Masternodes are impressive indeed. I read an article today that William Shatner is endorsing a solar powered mining operation in Illinois. I think mining will be around for the long haul personally.

We agree, however I think that its current use is setting a trend in the economy, I am inclined towards the lack of information about it and the possible benefits to our

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I agree to a degree. POS is a wiser option to POW. In addition I read there is a New project being created in Silicon Valley(California USA) entitled 'CHIA'. Yeah, like the 'pet plant' "Cha-Cha-Cha-Chia Plant" I dont care for the name either but supposedly they have created a New alternative Called 'Proof of Concept'. According to this article 'which I read online btw, So It has to be true'. Anyways, check it out for yourself, expected to be released mid 2019...

In theory the dPoS sounds like THE answer to all major PoW issues. But, as for the consensus is like the lowest of all fundaments, where are it s downsides? Couldn't find too many arguments against it, don't have them myself, but something in my guts is telling me, dPoS ain't that perfect we want it to be, and suddenly PoW is going to be so legit again... just a thought :)

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@chbartist, totally agree. In the bitcoin case, mining has passed the point of profitability. It's so resource intensive that it's a threat to the global ecosystem. Mining bitcoin is almost as harmful to the environment as coal mining, in countries such as China and Georgia.

DPOS is in my opinion the way to go. That's why I love Steemit.

Mining give you best security respect a POS...And it's more decentralized

Awesome article!

mining is on the way out...
when trying to implement new technologies such as DLTs, we can clearly see the steps of evolving into an efficient, energy and algo wise. there should be no mining in the future of crypto!

Mining can only be done with two things.
1.) Electricity
2.) An Expensive up-to-date computer

With that being said, you need to be rich to be able to invest in mining.

Unless there is a more efficient way to do it, It will soon fade away to those few who can afford it.

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I think the electrical consumption is a real threat for the future of mining, as blockchain will become a real thing in the next few years. Good article, thank you for sharing.

Yes that's true if Bitcoin Prices will decline like what we are looking today..
will make mining be a matter of past as what the miners will get is just -ve returns

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very true i agree it but some of project are doing great but BTC ETH &STEEM never look back its future