Introduction
Cryptocurrency is one of the most hyped technologies of this decade. We all think that cryptocurrency is used by some people who know technology and that’s it. No, there’s a lot more to know.
What is a cryptocurrency?
Here is the official definition for cryptocurrency on Wikipedia,
“A cryptocurrency, crypto-currency, or crypto is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of a computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership.”
A cryptocurrency, in simpler words, is a digital currency that is not issued by a government bank or other government entities which can be earned by a process called cryptocurrency mining. Some of the cryptocurrencies are Bitcoin, Ethereum, Dogecoin, etc. These cryptocurrencies are now being accepted as an alternative payment method on many sites.
Factors leading to the increase in cryptocurrency mining:
Some of the factors that lead to the increase in crypto mining in recent years are as follows
- Increase in the processing power of CPUs and GPUs.
- It doesn’t require any other investment apart from the computer hardware.
- Cheap electricity costs in some countries.
- Increasing popularity among the younger generation.
How cryptocurrency can be “mined”?
Cryptocurrency can be mined by anyone who has an internet connection, computer hardware, and knowledge about crypto mining. The computers of the miners are given a complex equation and when the equation is solved, they are rewarded with the cryptocurrency (Ex: Bitcoin) after the approval of all of the PCs which are connected in the blockchain. Sounds nice, right. While it is not illegal to mine cryptocurrencies in a lot of countries, cryptocurrency mining is now a promising career option. Large-scale data centers are being established by people around the world to mine bitcoin.
So, what’s the problem here?
Mining cryptocurrency is not a problem in its early days. Now let’s take an example. The widely used cryptocurrency, Bitcoin was established by Satoshi Nakamoto in 2009. The value of bitcoin was initially less. Like even less than a dollar. Crypto-mining required fewer compute resources back then. A lot of people started mining bitcoins and things started to change. As there is a fixed number of total bitcoins and more and more bitcoins were being mined every day, the scarcity of bitcoin gradually increased. This makes mining harder now. (i.e) requires more CPU and GPU power.
How does it affect the environment?
Cryptocurrency mining has become one of the threats to the environment when a lot of companies started to mine them at a greater scale. Thus came to existence, these huge data centers. About 65 percent of cryptocurrency mining occurs in China since electricity is cheap in that country. They are using so much electrical power, sometimes in terms of MW/h. Bitcoin’s annual energy consumption is even more than the total electricity used by countries like Argentina, Ukraine, etc. So, a lot of electricity is being used, just to solve these equations. Moreover, a recent study has shown that Bitcoin produces a total of 36.95 megatons of CO2 emissions annually and it is comparable with the carbon emissions of New Zealand. It is also estimated that bitcoin mining could alone cause the global temperature to rise by 2 degrees Celsius in the next 30 years.
Other impacts of Cryptocurrencies:
Cryptocurrencies are not monitored by any government entity, which means that any transaction which is performed with cryptocurrency will be considered illegal. This leads to a huge variety of problems, such as illegal transactions for drugs, etc. Cryptocurrencies are also used as Non-Fungible Tokens or (NFTs) where it is a unit of data stored in the blockchain which certifies a digital asset (an image, a tweet, or even maybe an audio file) to be unique and they are not interchangeable.
Problem with GPU Scarcity:
Solving these equations is much more efficient on a Graphics Processing Unit (GPU) than a general CPU. A CPU has fewer, powerful cores which makes it useful for getting a good single core performance whereas A GPU has more, but smaller cores which offer a greater advantage for parallel computing. A graphics card is a device that contains the GPU, VRAM, and other components soldered onto a printed circuit board, usually connected to the computer motherboard using a PCIe interface. Some of the parallel Computing APIs like CUDA which was developed by NVIDIA can be hugely advantageous combined with a powerful graphics card for cryptocurrency mining. There are also some specialized mining graphics cards in the market which use the same technology as the GPU and use the same PCIe interface. This made the large-scale data center owners buy graphics cards on a large scale, which provides the scarcity for graphics cards in the market. The graphics card market already faces the issue with the scarcity of raw materials, since the supply chain is affected by the COVID-19 Pandemic. This makes the GPU prices go extremely higher. Hence, the general consumers are greatly affected.
Conclusion
Crypto-mining is a very useful piece of technology that can be useful in many ways. But, due to the invasion of large-scale companies and millionaires into this sector, mining is becoming a new way of wasting electricity. There are many ways to earn money for a regular individual, and cryptocurrency is probably the hardest way of earning money now. Thanks for reading.
