If you are somewhat new to the world of cryptocurrency the term “mining” might seem a bit on the strange side to you. On top of that it is very expensive to get into when it comes to Bitcoin so you may be curious as to the nature and legitimacy of it. Is Bitcoin mining a scam possibly? Is it something that you should think about getting involved with that you can profit from?
The truth is that Bitcoin mining is not a scam, however, for about 99% of the people out there looking into this activity it is not going to be a good idea. On top of that it is not something that is sustainable in the long run… not by any stretch of the imagination.
I’ll explain what I mean by all of this but first I think its important to go over what exactly mining is and why it is necessary to keep the Bitcoin network running.
Bitcoin Mining In a Nutshell
It is called “mining” for a reason. Just as people perform hard work digging up the earth to mine gold and other natural resources, there is much work that goes into the mining of Bitcoin. But this type of mining is in an entirely different realm.
Computers do the mining by solving complex mathematical problems. They do so to “unearth” precious Bitcoins.
You see, there are a certain number of Bitcoins in the Bitcoin protocol design that are still “underground” in a sense. They need to be mined in order to be brought up to the surface so that they can enter the circulating supply.
But What Is The Point of Mining?
It might sound very strange. After all… what the heck is the point? It almost sounds like people can just start mining and make free money doesn’t it?
The purpose of mining is to secure the Bitcoin network and to keep things running smoothly. It is actually the miners that process all the transactions on the blockchain. They are the ones that keep everything together and without miners there would be no network.
So the Bitcoin reward that miners get for mining acts as an incentive to mine in the first place and to keep everything running.
Why Bitcoin Mining Is Not Worth It For 99% Of The Population
There was a time in the early days of Bitcoin mining where you could mine right on your computer. You could go to school, stay home with the kids, go on vacation, and do whatever you want while you kept the software running on your computer.
Nowadays it is much different though. The way the Bitcoin protocol is set up makes the mining more difficult as time goes on. This is to ensure that too many Bitcoins don’t get released too fast. Because of this, because of increased competition, and because of the inefficiency of normal computers’ mining potentials, there has been specialized mining equipment made.
ASIC miners are made specifically to mine Bitcoin and they are very expensive. This is what miners use nowadays because they are in competition with other miners. If you were to try mining Bitcoin on a standard laptop it would take you well over 100 years to be able to mine a block.
So what you need are these specialized ASIC miners and you need a lot of them. Bitcoin mining has become very centralized because only the megarich can afford to have profitable mining operations going. There are mining operations that have thousands upon thousands of these ASIC miners and if you only buy 1 or 2 you don’t have a chance.
How much do they cost you ask? Even for a cheap one you are looking at over $1,000 a piece. And this is why only the wealthy can afford to mine Bitcoin anymore. Trying to mine Bitcoin on your own is an even more moronic idea than trying to daytade on Coinbase.
An Alternative That Allows Regular People To Mine
There are things called “mining pools” that people can join to mine cryptocurrency like Bitcoin collectively as a group. These mining pools are nothing more than large groups of people that get together and contribute resources to a singular mining operation.
There are different kinds of mining pools, ones where you actually contribute computational resources from your computer and ones where you just contribute money to help fund the operation. Either way, you get rewarded according to what you provide.
I wrote a post that goes into more detail on cryptocurrency mining pools that you can read.
The Other Even Bigger Problem With Mining
The more pressing concern with Bitcoin mining is its waste of resources. It is possibly the biggest waste of electricity that this world has ever seen and quite frankly it is very concerning to me and many others.
When I say “its a waste”, I mean it. The complex mathematical problems that these mining computers are solving are wasteful. There is no point in solving them really. Basically its all a game where miners are competing to earn Bitcoin in a way.
Now of course there is a lot more to it than that but overall its a ridiculous process that is insane to continue with. That is why were are seeing so many other new cryptocurrencies using a POS (proof of stake) model rather than the POW (proof of work) model that Bitcoin uses where miners are necessary. With POS there is no mining and wasted electricity like there is for Bitcoin.
If you do a Google search for “Bitcoin mining electricity” you will see all sorts of terrifying headlines such as “Bitcoin Mining Uses More Energy than Tesla and Electric Cars” by Fortune, “Bitcoin mining consumes more electricity a year than Ireland” by The Gaurdian, and many others.
The thing about all of these headlines…… is that they are freakin true. Bitcoin mining is absolutely insane. Its on a path of certain destruction. There are plenty of studies out there that show this. One such study was mentioned in an article on ARS Technica showed that Bitcoin mining in 2017 likely consumed as much electricity as developed medium sized nations like Denmark.
Not a Scam But Possibly The Stupidest Thing EVER!
Bitcoin mining is not a scam. It does have a purpose and you can be rewarded for it, although its not practical for 99% of people out there. However, I strongly urge everyone to avoid this this mess. It is absolutely moronic and completely unsustainable.
There has never been a good argument for Bitcoin mining when it comes to the future of it. Those that are rich and wealthy from it will come up with every excuse in the book to keep it going but how many times in history has humanity seen greed ruin people and lead to destruction? The answer: All the time.
Don’t let the powerful elite cloud your judgement. Bitcoin mining is unsustainable, dangerous, and will absolutely be a world disaster if it is not dealt with.
It is possible for Bitcoin to switch to a Proof of Stake protocol but at this time they have not and I cannot support this Proof of Work wastefulness.
If you have anything you would like to add to this or any questions, please leave them below and I’ll get back to you soon…