The main things you have to know about mining in an interview with Hervé Larren, co-founder of Global Crypto Ventures.
How has mining evolved in the past 5 years?
Five years ago, the bitcoin network had miners hashing 8 million times per second. At the end of 2010, that figure had grown to 116,000 million times per second. And by the start of 2014, hashing had reached to 10,000,000,000 million times per second. As hashing grew exponentially, so did the level of difficulty in mining due in large part to the hardware arms race. Among the many mining hardware changes throughout the years, the most notable evolution came in 2010 with a shift from using the CPU (central processing unit) to graphics cards (GPUs) and FPGA (Field Programmable Gate Array). However, in 2013, the entire landscape further changed with the introduction of the ASIC (Application Specific Integrated Circuit), which is a chip designed specifically to run the SHA-256 algorithm and produce Bitcoin and Bitcoin cash.
How are miners compensated?
Right now, miners are compensated through a combination of Bitcoin’s block reward and transaction fees. Bitcoin’s block reward is still large and provides the majority of miners’ earnings. It is important to note that miners provide an important service – the security and integrity of the network. A large network hash rate keeps Bitcoin safe from attacks by bad actors. ASIC mining hardware also keeps Bitcoin secure through proof of work. Miners need an incentive to pay for electricity and hardware costs.
Is it still profitable to mine at home?
Mining depends on three main criteria: how much you are willing to spend on your equipment (and availability of it), the price of electricity, and the expected price at the moment you want to sell. These operations need to be scaled, and it is more profitable for individual miners to mine in facilities, such as the one at Global Crypto Ventures.
Is mining damaging the environment?
The environmental impact of Bitcoin mining has been widely touted, but a recent report indicates that the actual damage from Bitcoin mining may be far less than that associated with fiat currencies and other industries. Traditional data centers, gold mining and cash production all consume substantially more energy than mining. The report indicates that the annual consumption of power from Bitcoin mining is 8.27 terawatt-hours per year, which is more than Ireland and other nations comparable in size. Nevertheless, this number is actually only an eighth of what data centers in the U.S. consume annually, and the global production of fiat currencies stands at 11 terawatt-hours per year.
How do mining pools work?
Pooled mining is a mining approach where multiple generating miners contribute to the generation of a block, and then split the block reward according to their contributed processing power. Pooled mining effectively reduces the granularity of the block generation reward, spreading it out more smoothly over time.
By Emilia ROMAGNA
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