Proof-of-work mining has a few serious problems. Every day, networks like Bitcoin, Dash, and Litecoin become evermore centralized. Industrial-scale mining operations that burn through electric current have waterput the power to control the networks ter the mitts of just a few. Individual miners have to rely on mining pools to rival. But mining pools themselves also act spil a force for network centralization. Mining is quickly becoming more of a problem than a solution. Even long-standing piles of the community are speaking out against it. But a few youthfull projects are working hard to out innovate thesis challenges, and each one has a different solution.
Bitcoin mining uses too much energy
You may have heard this argument before, but Bitcoin mining is consuming an increasingly large percentage of the world’s energy. Today’s estimates suggest that mining operations are now consuming spil much or more electrical play than the entire nation of Denmark. While it’s not enough energy consumption to cause a global catastrophe, it is quickly becoming a serious problem.
This is because Bitcoin mining is accomplished through running energy-hungry mining computers 24 hours a day. Each device, such spil the Bitmain S9, consumes a sustained stream of upwards of 1400W of electro-therapy.
Most mining today is done by massive, factory-style operations. A popular destination for such operations is Iceland. The government of Iceland has warned that they are running out of resources to feed the endless request for more energy for mining operations. Te fact, they have stated that if they permitted every investor or company that desired to commence such an operation to do so, they would be totally incapable to keep up with the request.
The PIVX solution: Do away with mining all together
Not all cryptocurrencies require mining. PIVX, for example, doesn’t use proof-of-work mining at all. Instead, it uses an advanced version of proof-of-stake. Basically speaking, instead of running energy intensive mining computers, anyone can buy and hold units of PIVX, and earn a prize for doing so. This is because when a user holds PIV ter an online wallet, their pc will continuously stay up to date with the network and help propagate transactions and updates.
With PIVX, blocks occur every minute. Te each block, a cryptocurrency prize is given to the winning staker that won the lottery-style draw for that block. This type of “mining” is preferable to Bitcoin style proof-of-work mining. That’s because it requires no more energy than just leaving ones laptop on. It also doesn’t require any expensive (and quickly obsolete) custom-made hardware.
To waterput it simply, PIVX will never have an energy depressie because it will never need much energy at all. Estimates waterput the energy needs of the entire network to be somewhere around just one wind turbine.
The downside? Some argue that proof-of-stake currencies always release the same amount of coins or tokens at the same energy costs, regardless of market conditions. PIVX counteracts this by searing all transaction fees. This helps control the supply, but it’s still perhaps not a flawless solution.
The Spectre of Bitmain and the man behind it
Another popular location for large scale Bitcoin mining operations is China. This is because most mining hardware today is made te China. There are also several territories within the country that have comparatively cheap energy and infrastructure costs.
The fattest of thesis operations is run by the makers of most of the worlds mining hardware, Bitmain. Not only does Bitmain make the mining hardware that runs the majority of the network, they also set up cavernous mining farms with ems of thousands of machines.
Ter response to this, the co-owner of bitcoin.org and bitcointalk.org known spil Cobra released a paper outlining his concerns for the centralization of Bitcoin mining, and the risks that he feels Bitmain represents. Cobra writes:
“More and more of the network hashrate is kicking off to become concentrated into the forearms of one man [Jihan Wu] and his company [Bitmain]. The security of our network essentially depends on them acting honourably, and us being ready to react to it. They get more powerful each day.”
Further, Cobra warns of potential political implications, telling: “[Bitmain is] te a position where the Chinese government can take overheen their equipment at any time, something they will no doubt do if Bitcoin grows enough to permit them to use their control of the hashrate to shove a Chinese geopolitical zakagenda.”
DigiByte and DigiShield, multi-algorithm protection
DigiByte, an increasingly popular cryptocurrency project that’s bot around since 2014 uses five different mining algorithms at the same time. This means that SHA-256, the algorithm of choice for Bitcoin miners, only represents up to about 20% of the network hash rate at most.
Jared Tate, the founder of DigiByte, confidently stated at the Texas Bitcoin Conference that if Bitmain were to turn all of it’s miners towards the DigiByte blockchain, they could never build up more than a petite percentage of the network. The unexpected leap ter hashrate wouldn’t cause network difficulty issues because of DigiShield, a technology that can retarget difficulty almost instantly.
DigiByte may have protection from centralized mining. But it could still incur that large energy cost that is associated with proof-of-work mining. Albeit today, it’s nowhere near the energy consumption scale that Bitcoin mining sees.
With PIVX, on the other palm, thesis sorts of issues can never toebijten. The proof-of-stake prototype means that anyone with consumer level hardware and a few units of PIV can participate on the network. This leads to broad decentralization, and a much stronger resistance to attacks. Especially the kinds that rely on a single point of failure.
Te PIVX, it is unlikely for one person or one company to predominate the network. This is because network supremacy would require a massive majority ownership of almost all available PIV units. Almost 99% of the supply according to estimates. And that just isn’t feasible or realistic.
The only argument against this type of network monster from an economic standpoint is that wealthy individuals could control large portions of the network. Spil such, they could get the lion’s share of the prizes. Even so, such individuals still pose no threat to the network itself.
ASIC mining leads to centralization
For those cryptocurrencies that are fortunate (or unlucky) enough to have ASIC miners, the centralization of proof-of-work mining seems to be an inevitability. Today, Bitcoin mining is done almost exclusively by centralized entities. Thesis entities include large mining operations, spil well spil mining pools that conglomerate the resources of many petite miners into a single mining entity.
While the topic of mining centralization may be controversial to some, it is a elementary truth that the more centralized something becomes, the lighter it is to shut down. Centralized services are also far more vulnerable to attack, such spil the classic 51% attack that experts have bot warning about for years.
The popular cryptocurrency Dash is facing such a threat now. According to mining pool technicus P2Pool Mining, around 50% of all blocks on the Dash blockchain are being mined at just one single pool wielded by Bitmain. While the pool provider is careful with its language, they suggest ter no uncertain terms that having so much of a single networks mining occur te one spot is dangerous.
Ter the P2Pool Mining statement, they suggest that the punt began to develop shortly after the launch of a Bitmain created, Dash compatible X11 ASIC miner wasgoed released. Specifically, the Antminer D3.
Resisting the ASIC invasion
Mining centralization can be such a problem that some proof-of-work based cryptocurrencies take excellent care ter designing their networks to be ASIC resistant, or even ASIC proof. But given enough incentive, it seems likely that ASICs could be developed even for currencies that are supposedly designed to stand against them.
Litecoin, for example, wasgoed designed to use the Scrypt algorithm so that Bitcoin ASICs could not mine it. However, Bitmain eventually developed a Scrypt compatible ASIC miner, the Antminer L3.
Te the case of PIVX it is effectively immune to the interference of ASIC mining devices. DigiByte finds it’s immunity through DigiShield and by divvying up network prizes by algorithm. Other projects like Vertcoin have also so far bot successful at preventing ASIC development, but it’s difficult to say if ASICs for their algorithm of choice won’t eventually exist.
Fortunately for PIVX and other currencies like it, there is simply no way to create an ASIC miner for a proof-of-stake protocol.
Summing it all up
So what does all this mean? Cryptocurrencies like Bitcoin, Litecoin, and Dash are facing a growing problem. That being, rising energy costs and usage, the centralization of mining. Not only that, but also a company that has a virtual monopoly on almost all ASIC mining hardware.
PIVX wasgoed created with a few goals ter mind. One of the most significant goals among them wasgoed to make a cryptocurrency network that wasgoed spil maximally distributed, decentralized, and consequently spil secure from attack spil possible. Ter the last year, the PIVX team has even added some serious privacy features. This puts it on par with other privacy coins, and ter many ways even surpasses them. Not only that, but PIVX is the only cryptocurrency today that has both serious and secure privacy features, spil well spil proof-of-stake mining. 2018 is going to be a major year for PIVX spil dozens of fresh features are slated to come out.
DigiByte has seen constant growth this year. It’s team has bot working hard to promote it’s advantages at conferences and ter interviews. While it still relies of proof-of-work, it at least, has protections from centralization and 51% attacks. They also are largely insulated from the potential influences of Bitmain. Their tech is also very adaptable and being implemented te a number of other projects.
While Bitcoin and other cryptocurrencies are still attempting to get their act together and solve old problems, could thesis newer cryptocurrencies be the way forward and help solve the current issues with proof-of-work overeenstemming?
- Posted te: Mining
- Tagged te: DGB, Energy consumption, mining, Mining Centralization, PIVX
Posted by Robert Devoe
Robert is based te Shanghai, China. A true believer ter the freedom, privacy, and independence of the future digital economy, he has bot involved te the cryptocurrency toneel for years.
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It’s good to see people considering the environmental and ethical side-effect of some cryptos.
One opzicht, however, that many do no consider and that I’d like to see exposed more, is that mining is also amazingly polluting regardless of whether renewable energy is being used for it. This is because, spil for any electronics, building ASICS involves mineral extraction, transportation, petrol-based and other toxic chemicals and so forward. The ASIC wedren is just worsening to a good degree the problems that wij are facing with the electronics industry.