Crypto Mining and Some of the Various Factors Limiting Number of Miners

Cryptocurrency mining is something that isn’t new to anyone who is into blockchain and cryptocurrency… in fact, it is usually one of the first things to come across when people discover blockchain and cryptocurrency. But before go deep into the main topic of this post, I will like to briefly explain what cryptocurrency mining is…

In simple terms, cryptocurrency mining is simply a process of verifying transactions, minting new coins and adding new block of transaction on the blockchain network. Bitcoin mining is the most popular and oldest form of cryptocurrency mining and is still very popular today.

Over the years cryptocurrency mining have become very profitable that there are a lot of miners who are not only securing the blockchain network but also minting new coins and continuously verifying transactions on the blockchain to ensure they are legit. Cryptocurrencies like bitcoin, litecoin, ethereum are a typical examples of blockchains that involves mining.

Expensive mining rigs

Mining rigs are super expensive and not many people can afford to purchase these expensive mining rigs. Back in the days when bitcoin was still new, it was much easier to mine bitcoin because there was less competition for miners. Now as bitcoin has grown so popular and the value of BTC has increased, the competition to become a miner has gotten to big that it is very difficult to become a successful miner now. Because of the high demand for mining rigs, the cost of mining rigs are so expensive that not everyone can afford to pay for the mining rigs.

Cryptocurrency price volatility

This is also a big that limits everyone from becoming a miner because the volatility in the prices of cryptocurrencies can discourage people to venture into mining. Also, the price volatility can reduce profits to be made from mining. We all know that there is no guarantee that miners would make back their money invested into the mining rigs and it can even be worse when the prices of the mined cryptocurrencies has decreased a lot. Mining anything tangible and meaningful requires a large investment of powerful mining rigs, which means that the more computational power, the higher the chance of becoming the first to solve the mining problems. This means that anyone with low mining power would most likely not make any profit if the prices of the cryptocurrency is low.

High electricity consumption

Electricity bills can be very expensive depending on the geographical location of the individual. Because of the high electricity consumption of mining rigs, it electricity bills can be outrageous that it makes it almost impossible to become a miner in that geographical location. This is one of the main reasons why not everyone can become a miner because of the potential cost of paying for electricity bills and the cost of buying the mining rigs, which when combined become impossible for everyone to afford.

Not everyone has the required level of technical knowledge

Technical knowledge is a key essential for setting up a mining rig whether it is bitcoin or ethereum or any other cryptocurrency mining. Not everyone has the required level of technical knowledge that is needed to be able to set up a mining rig for effective mining.