What is mining and what is it for – End of mining in 2019

In recent years, a decline in the popularity of such a phenomenon as the mining of digital currencies has been noticeable.

This is due to several factors, for example: the increasing complexity of the process; high cost of equipment; low profitability; long payback period. The already expiring year 2018 was accompanied by numerous opinions that mining has already outlived its usefulness and that this activity can be really effective only for large companies with huge computing power and budget.

What is mining and what is it for?

Before you figure out what mining is for, you should decide on the concept of cryptocurrencies and mining itself.

Cryptocurrencies are digital or electronic money that is decentralized and not backed by physical values. In other words, it is a modern medium of exchange, transactions with which are carried out within a certain network, where users are connected. All transaction data is stored within this network, and the information is distributed evenly, rather than being subordinate to a particular specific center. Digital money is presented in the form of electronic coins, but they are not endless, since there is such a concept – the emission of cryptocurrencies. Each type of cryptocurrency has a limit limited by the volume of units, upon reaching which new coins will no longer appear. This is the answer to the question when mining will end.

So what is mining, the end of which comes when the emission is reached?

Mining is the decryption of these blocks using complex computational algorithms. These blocks contain information about past network operations based on the preceding blocks. Thus, in the blockchain network, where all the blocks are located, blocks are regularly formed that contain encrypted data. This network can have branches, but it is also self-regulating. According to certain principles laid down by the developers of the coin, it is possible to calculate the block in order to eventually receive a reward in the form of new coins. There is a certain parameter that, when certain conditions are met, increases the difficulty of solving blocks.

Therefore, the closer the total mined amount of coins is to the final limit, the more difficult it will be to mine each new unit. Accordingly, not only the value of the coins will increase, but also the cost of their extraction. In some cases, mining may not even be economically viable and lead to losses.

Market problems that have arisen

As of 2018-2019, in the mining industry for ordinary users, there are a lot of problems and unpleasant factors, conditions.

The most famous and strongest problems in the field of mining can be imagined:

• Downtime… In most cases, mining therefore implies a considerable payback period for equipment and investments. The standard term is one and a half years, but not infrequently it can exceed two years. In view of heavy loads and the need for uninterrupted operation, which overloads the equipment during operation, the risk of damage to ASIC and video adapters, power supplies and other components are large enough. In the event of a breakdown, in addition to the cost of repair and restoration, the miner will also be idle, which automatically deprives him of profit and increases the payback period.
• Communication problem… Miners and the efficiency of their activities depend on many factors, for example, on a stable Internet connection and power supply. From time to time, failures in the work of these communications happen for various reasons, which also causes downtime and a decrease in profitability.
• Equipment Race… In mind constantly growing complexity the process of mining and the prevalence of this phenomenon among the population, hardware developers every year try to release even more powerful and, accordingly, expensive types of equipment. Thus, in order to keep up with modern trends and not lose efficiency, many miners are forced to replace old equipment with new ones.
• Placement problem… Mining on an ordinary computer has become the last century for a long time. Those who really set themselves the goal of making money on the mining of cryptocurrencies have switched to mining farms based on GPU video adapters or ASIC… Such a complex takes up a lot of space, emits a lot of heat and noise. It is often very difficult to maintain such a structure in an apartment, and you have to find a suitable and safe separate room.
• High cost and payback period… As mentioned above, mining equipment not only costs a lot, but also constantly rises in price. Top-end video cards now cost over one thousand dollars, and ASICs are several times more expensive. In addition, the miner is also spent on other components, paying bills and many other related costs.
• Forks… In the cryptocurrency world, in practice, it is not uncommon for a particular cryptocurrency to change the source code and receive a new, alternative version. Many cryptocurrency developers and initiators of such forks, for their own reasons, do not provide an opportunity to mine a new coin using ASICs. This puts the owners of such devices at a very disadvantage.
• Course fluctuation… As you know, cryptocurrency rates can be subject to large fluctuations, both short and long-term. Thus, over a certain period, you can enrich yourself many times over, or, on the contrary, the bills for mining payments can exceed the fallen coin rate.

Industry development perspective

Mining Bitcoin

Many who are currently engaged in the production of digital currencies are interested in the future prospects of mining. Of course, the emission of bitcoin is still far from exhaustion, and therefore regarding the value of coins in the future, a lot of diverse forecasts are built.

Some argue that the cost will hit record highs that were recorded at the end of 2017.

Other analysts promise much greater growth in the cryptocurrency market and one million dollar bitcoin by 2020. For those who still want to have time to join the ASIC or GPU mining, the best solution would be budget mining on an AMD video card.

Ethereum and altcoin mining

Mining Ethereum has always been a profitable activity from the very beginning of the launch of this coin, which is not you can say about many other and less promising altcoins. Thus, the end of ether mining has not yet come, and experts give mostly ambiguous, but generally encouraging forecasts.

Those who do not focus on the leading coins, where the bulk of the power and funds is concentrated, can be recommended to pay attention to the smaller and undervalued cryptocurrencies. It is they who can bring hundreds of percent of profit in case of unpredictable growth, and in case of falls, losses will not be so significant.

Is it worth starting

Of course, almost everyone has heard about cryptocurrencies, but not everyone decides to enter this area and start earning. Many newbies are interested in what the potential income from mining is and whether it is worth starting to do it now.

Mining income is a value that can only be predicted on an average, since it depends on many factors and, above all, on the chosen cryptocurrency. If the user has an idle computer or funds to purchase all the necessary powerful equipment, then it is quite possible to start mining.

Despite the fact that the cryptocurrency market is very volatile, the cost of equipment and the complexity of mining are growing, mining is still one of the most profitable ways to make money on cryptocurrency.… Of course, there are risks of its own, but they are no more than, for example, in trading on exchanges cryptocurrency.

Those who have a small budget or do not want to delve into all the intricacies of mining can start investing in cloud mining and receive income on full liability.

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