Over the past few years The cryptocurrency mining sector has started to gain a lot of conventional financial traction. For example, market research firm Technavio recently released surprising data that says the global mining hardware market will grow by a whopping $ 2.8 billion between 2020 and 2024. This incredible surge has been attributed to the increasing popularity of mining assemblies, most of which are currently concentrated in China.
In addition, companies like Btc.top have tried to redefine the concept of Bitcoin Acquisition (BTC) in recent months, e.g. through the use of a technology called “joint mining” that allows users to mine cryptocurrencies remotely by purchasing a certain amount of hash power from an external player. According to Btc.top The new technology will help mitigate many of the risks currently associated with popular cloud mining products by giving users greater financial and operational flexibility.
Jiang Zhuoer, CEO of Btc.top, told Cointelegraph that the company would facilitate the participation of individuals and institutional customers in cryptocurrency mining due to the company’s “infrastructure, strategic business partnerships, and low fees from” electricity.
The concept of joint mining is not entirely new
Despite the fact that the use of Btc.top from joint mining is hailed as an important step forward for the cryptocurrency mining sector, it is worth noting that many mining companies and local companies in China have already used this model deal. One of the main advantages of using this service framework is that electricity can be obtained at cheaper prices. In addition, revenue depends on the ASIC model and the efficiency of farms, while the underlying revenue lever is risk sharing and profit sharing. Thomas Heller, director of global business at the F2Pool mining group, told Cointelegraph:
“Many of these types of mining operations are located in the Sichuan region of China, which has abundant hydropower. One disadvantage, however, is that Sichuan is vulnerable to many natural disasters such as earthquakes and floods.”
It is also worth noting that Btc.top is currently charging its users around $ 0.033 per kilowatt hour to facilitate their mining operations. However, It appears that electricity costs can continue to fluctuate significantly during the rainy season in Sichuan, a closed province in southwestern China where the company has its farms. This is important because users are billed for the power consumption of their devices throughout the program under a fixed contract. Although this model appears lucrative due to lower electricity prices, such inconsistencies are always present in reality for every miner working in this region.
When resolving the concerns above, Zhuoer said his company started mining in China in March, long before the rainy season lowered electricity tariffs. In addition, most of Btc.top’s customers in China are large miners who are already taking advantage of subsidized energy tariffsHe added: “After the rainy season, which is expected to be in October, is over, these rates will likely be those in March that are already the lowest for industrial-scale miners.”
Will the dominance of the Chinese market continue?
China is unlikely to lose its current hash dominance at least in the coming months due to the ongoing rainy season in Sichuan. Although the United States, and Texas in particular, has seen tremendous growth in its existing mining infrastructure, Heller does not expect the same speed and ease of growth that has been achieved in China. Once the hydropower season ends, some miners will move from China to the United States, Kazakhstan, and the Middle East, where electricity prices are cheaper.
However, Ditar Bekbauov, founder of the Xive mining energy market, added that a growing number of traditional investors are entering mining through countries such as the United States, Canada, Russia, and Kazakhstan. In her opinion: “The only way to compete with China in the next five years is through the software and services niche. Hardware is out of the question. “
Andrej P. Skraba, the chief marketing officer of NiceHash, uA cryptocurrency hash power broker shares a similar perspective, telling Cointelegraph that China is likely to remain one of the mining superpowers in the world. However, he added: “We will see more miners moving to the United States, Canada and Canada to former Soviet states with cheaper electricity prices. The equation is simple: if a country or territory can supply cheap energy, miners will gather there. Efficiency is the key word here. “
PoS is attractive, but needs to be polished
In a nutshell, The proof-of-stake mining model allows users to validate block transactions based on the total number of coins they own. This essentially means that the more tokens a miner has, the more mining power they will have. Although the above configuration seems quite attractive on paper, Bekbauov found that PoS-based networks are still in their infancy and need some work before they are fully trustworthy, at least for security reasons. He added:
“We’re still not sure how PoS will work and whether different projects will follow the initial blockchain immutability rules. We don’t know how secure POS projects are. In the case of hacks, validators and stakers can change the blockchain or not. I am sure that there will be both PoW and PoS in the future. “
Igor Runets, the CEO and founder of BitRiver, Russia’s largest Bitcoin mining company believes PoS networks have yet to be testedIn particular with regard to real use cases, the following is added:
“I think some of the concerns about centralizing the PoW model that the PoS model was originally intended to solve remain the same in both models, and it is only a matter of time and assumption until PoS networks are exactly the same. To care. “
In addition, liquidity mining, a community-based data-driven approach in which a token issuer or token exchange has the ability to reward a group of miners for providing liquidity for a particular token, appears to have gained large numbers from PoS blockchains such as Terra, Cosmos etc.
Mining has changed, but the future is still uncertain
Despite the fact that competition in the global mining sector has increased significantly since 2017, After the last halving event for Bitcoin rewards, the ratio of the native hash rate of the largest cryptocurrency rose to a record high, leading to a BTC mining difficulty that hit a record 17.3 billion. Heller commented on the competitive aspect of mining:
“”Many previous generations of ASIC miners were driven out of the system and a new generation of machines was adopted. We achieve high hash rates and levels of difficulty. Daily mining sales are currently only $ 0.08 per TH. “
However, fears continue to plague the industry as legislative and regulatory action remains an unexpected variable. For example, in early July Venezuela unexpectedly announced a ban on crypto-mining activities from all government houses.
As with exchanges and other cryptocurrency products and services that are subject to various anti-fraud policies, it therefore appears that mining will also be regulated in the coming years. Skraba added: “It is important that the industry finds ways to make this lucrative market more open and transparent.”