When you hear the word "miner", you no longer picture someone in a dusty helmet with a pick. The modern miner can be your average guy with a stack of GPU units at home or even a huge facility nested near a hydroelectric station to benefit from the cheap energy prices.
Mining the crypto-coins has grown from a hobbyist pastime to an industry of its own with high operational costs and tough competition. As Sebastian Quinn-Watson, a consultant with Blockchain Global has recently pointed out:
“Today, about 1,700 bitcoins are generated a day. Basically, we [miners] are all fighting over one coin every 10 minutes."
Why Cryptocurrency Mining is No Longer That Profitable
While the price of bitcoin is now on the decline, miners are picking up the so-called 'altcoins' such as Ether, Monero, Zcash, Bytecoin and others. These coins are simpler to mine, especially if your mining setup consists of GPUs only as bitcoin mining now requires more advanced equipment such as ASIC chips and/or FPGAs.
However, GPU mining is also on the slow decline. As more and more people join the craze, the individual mining profitability decreases. GPU hardware itself is quite expensive with an average unit now retailing for $2,200-$2,700. Additionally, you should account for a growing electricity bill, as mining activities consume a lot of power.
In fact, the entire concept of mining may soon go extinct with Ethereum. The founding members are now considering the idea to change the method of validating the blockchain transactions.
Right now mining fills a great need – delivers consensus among the network participants regarding the state of historical and current transactions. This consensus is based on the complicated cryptographic problems miners solve with their hardware and is referred to as “proof-of-work”. In a nutshell, that what makes blockchain-based transactions so secure and unbreachable.
However, there’s another method to ensure this consensus on various transactions. It’s called 'proof-of-stake'. Instead of having miners to solve the math problems, a blockchain network could use a pool of validators. These are other users who are pseudo-randomly chosen to validate a certain transaction by staking their cryptocurrency on the blocks of transactions that they claim should be added to the public blockchain.
As a new block gets added to the blockchain, a new set of validators is then asked to stake additional crypto on the new blocks and so on. The validators gradually become incentivized to validate the chains, which have the most of their crypto staked in their transactions. Each validator also receives a portion of the transaction fees, meaning they are “earning an interest” on their stakes.
This alternative method eliminates the need for miners' 'services'. While no fixed implementation date comes for this change, a lot of miners have already grown concerned about their future.
On the other hand, a lot of industry experts say that Ethereum bubble is soon to burst with other coins to follow, making the prospects of mining even gloomier. Granted, there are the alternative use cases for GPU hardware.
From GPU Mining to Powering Deep Learning Algorithms and Super Computers
Cryptocurrency miners are not the only ones struggling to accumulate enough computing power for an affordable cost. Scientists exploring new deep learning methods; engineers executing large-scale statistical computations and artists creating 3D rendering models also require access to a large pool of power.
Most computing processes are now required to be completed at a much faster pace than before. Yet doing so requires a lot of power that doesn’t come cheap or instant when rented from data centers.
IoT developers also face a unique problem – most times the data-generating devices are not located close-by to data centres. The current cloud-based models come with a significant lag, which can hamper the product performance.
To bridge the growing gap between the demand for power and limited supply, a few curious projects were launched recently. First is Altumea – a new peer-to-peer, decentralized platform connecting GPU owners with those in need of additional computing power. Executors are rewarded with the platform's token, which can be redeemed as cryptocurrencies. The founders plan to attract individual owners, who want to additionally monetize their hardware and power some cool research as a pleasant side-bonus.
Next, there’s the Golem Project – a larger platform with an aim to create the world's premier supercomputer. They also incentivize users to 'lend' their power, however, the platform caters to both individuals and larger organizations such as commercial data centres.
While the profitability of cryptocurrency mining is expected to shrink over time, the demand for advanced computation will only grow from now. Distributed computing can truly fuel the rapid progress in areas such as IoT, deep learning and statistical computing, meaning more exciting innovations at our fingertips through shared effort.