Bitcoin Mining: The Misunderstood Heart of Bitcoin

Bitcoin mining is the process of earning Bitcoins in exchange for validating Bitcoin transactions. It is done by miners and is one of the most important processes in the blockchain network. It has proven quite lucrative over the years and has seen many people and corporations jump on it.However, as productive and vital the process is, it has not lacked its fair share of criticism and backlash. Such negativity has shown a bad light on the vital blockchain process. In this article, we clear the air.

Bitcoin Mining is Bad for the Environment

The narrative that Bitcoin mining is bad for the environment has been around for a while.  It is a narrative that was popularized through negative and misguided information. The focus was to highlight  the side effects of data mining on the environment were found to be false and misleading.

Contrary to this negative narrative on Bitcoin mining, a 2018 report by the World Economic Forum proved otherwise. The report revealed 65 uses cases for blockchain technology that would help the planet and fight for environmentalism.

Bitcoin Mining Consumes Excessive Electricity

This narrative came about due to the high energy needed to mine Bitcoins. While it is true Bitcoin mining consumes a lot of energy, the idea that it can lead to boiling of the sea was much exaggerated. Extensive research on the process revealed that data backing up the narrative was false and inaccurate.

Estimated Electricity Cost of Mining 1 Bitcoin
Source: Power Compare

The truth is, 8.27 terawatt-hours a year is not even 0.28% of the US’s annual energy consumption. When compared to other industries, Bitcoin mining still consumes much less power than others. Cash and coin production usage averages at 11 TW-hours a year. Gold mining consumption alone is coming in at a tremendous 132 TW-hour a year.  Now that is a serious amount of energy.

Bitcoin Mining Causes Huge Co2 Emissions

By 2019 reports were circling on the web that Bitcoin energy consumption was negatively affecting the environment. A 2019 paper in Joule estimated that the annual carbon dioxide emissions from the Bitcoin network were as high as 22.9 million metric tons.

Bitcoin Mining - Pollution & Environment
Source: Steemit

A study by CoinShares, a leading crypto asset management and analysis firm, also revealed that the biggest share of the electricity used by Bitcoin comes from clean, renewable energy sources like wind, solar, and hydropower.

CoinsShares’ study contradicted the notion that Bitcoin energy consumption causes huge CO2 emissions. Plus, compared to clean, renewable energy sources, coal is too expensive to be used for Bitcoin mining.

Cloud Mining for the Future

As lucrative as Bitcoin mining is, it is not for everyone. The whole process can get complicated quickly. Without cheap electricity, the necessary mining equipment, the know-how of operating the equipment, and plain luck, making it with Bitcoin mining can be difficult.  Enters cloud mining as a solution.

Cloud mining involves mining Bitcoin using rented cloud computing power. There are cloud mining firms that exist to facilitate cloud mining.  How it happens is that you open an account and remotely participate in the Bitcoin mining process for a basic cost.

Types of Cloud mining

There are three types of cloud mining that cover the needs of different kinds of users.

Bitcoin Cloud Mining

1. Buying or leasing hashing power:

Here, the user rents hashing power for a set amount of money. After that, the user is only dedicated to collecting his profits. He does not need to have hardware or a virtual server to mine for crypto.

2. Hosted mining:

In this case, the user buys or rents a mining machine, and the company offering the service takes care of it. Here, the company and the user sign a contract that defines the price and the distribution of the rewards.

3. Virtual host mining:

In this scenario, the difference is that the user rents a private server. Once the user pays the rent, they have control over which mining software is used and which crypto is mined. The company is in charge of the maintenance of the hardware.

Advantages of Cloud Mining

1. Beginner-friendly:

Cloud mining simplifies the whole cryptocurrency mining process. One does not need any technical knowledge to participate in cloud mining. You simply need to create an account, pay the required fee, and activate the service.

2. No need to purchase hardware;

Not everyone can afford the expensive Bitcoin mining equipment. It is one of the many reasons people get locked out of crypto mining. With cloud mining, people don’t have to worry about purchasing any mining equipment.

3. No operating costs, heat, or noise:

Crypto mining equipment, when in operation, can shoot up your electricity cost, heat your place, and emit deafening noise. With cloud mining, there is no equipment involved from your side.

Disadvantages of Cloud Mining

1. Low earnings:

As a ready-made solution to Bitcoin mining, you can be sure cloud mining will negatively affect your earnings. The returns will be relatively low.

2. Scams

The cloud mining industry has its fair share of scams and thieves. Taking the time to research the best cloud mining platform is vital to prevent losing your funds to scammers.

In Summary

Crypto mining has its advantages and disadvantages. While some people decide to focus on the disadvantages, some opt to focus on the advantages. As more people and corporations jump into crypto mining, crypto mining’s potential risks and disadvantages are bound to be limited by the expanding community. What’s more, even when the market is low, Bitcoin mining is likely to outperform traditional investments.