Centralized Cryptocurrency Mining – An Ongoing Process


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Centralized Cryptocurrency Mining – An Ongoing Process

Lately, the crypto industry saw a steady move towards a centralized cryptocurrency mining market with big players taking the majority of the share. At the same time, mining equipment saw a similar trend, especially with NVIDIA’s slow withdrawal from the crypto industry.

With major mining pools taking up most of the space, individual miners with CPU/GPU equipment have difficulties competing. Due to the rising energy needs and lack of development, mining farms will seek out pools as a protection measure. Additionally, NVIDIA’s decision to leave the crypto industry helped ASIC producers gain more mining market shares.

The Rise of Centralized Cryptocurrency Mining Difficulty

Currently, Bitcoin’s mining difficulty reached almost 7.5T of hash rate, according to the CoinWarz statistical data. Other altcoins, however, including Ethereum, Litecoin, and Monero experienced either stable or downturn trends in 2018. Looking at the year to year differences, though, it is evident that the difficulty rate rises over time for almost all altcoins.

A report by Diar stated that trends with coin values pushed miners off the altcoins due to lower profitability. In terms of cryptocurrency values, 2018 seems to be the year of the bear trend, as prices plummet down. With increased difficulty and price dips at the same time, the report concluded that centralized cryptocurrency mining was on the rise.

Crypto Development Issues

Lack of development consensus is yet another issue that plagues the mining industry, according to several reports. Ethereum, for example, faces another delay of Constantinople hard fork due to issues at the testnet platform Ropsten. The change, as reported by the platform, would decrease block awards from 3 ETH to 2 ETH. Monero, on the other hand, faces security issues due to how focused on the privacy the platform is.

Bitcoin faces much the same issues, with interest groups pushing for their own agenda. Several reports accused large exchange platforms and centralized cryptocurrency mining pools of market manipulation. At the same time, the development team of the blockchain network faced issues regarding its functionality. Recently discovered bug in the Bitcoin’s system showed just how vulnerable the BTC system is, according to reports.

Related: https://coinedtimes.com/bitcoin-bug-that-was-kept-undercover-finally-revealed/

Increased Power of Pools and Farms

As difficulty rises, the competition between giant mining pools dwindles down to the most powerful groups. The BTC.com data shows that the top 10 pools keep 73% of the hash power rate, signifying a trend towards centralized cryptocurrency mining. Individual mining rigs have almost no to very little power when competing with large players. The continuous centralization of the mining supply is one of the main themes of the development discussion in the bitcoin community.

In terms of security, the same issues appear in Ethereum, Bitcoin Cash, and Litecoin markets. In recent months, there have been a number of reports of hacked hash power used for altcoin mining. The report made by the Cyber Threat Alliance (CTA) indicated that a massive 459% increase of crypto hacking occurred. These cryptojacking activities, as stated by the CTA, pushed miners towards pools rather than relying on their own protection system.

Increasingly Centralized Mining Equipment Market

According to the results of NVIDIA’s RTX 2000 and 2080 series, the company might seek to leave the crypto industry. Lower profits from the equipment sales came as a result of cheaper alternatives in the market, specifically ASIC cards. The CPU/GPU mining is becoming less attractive in terms of hash power, due to the rising hash difficulty. Thus, participants with CPU/GPU mining program face tough competition from specialized mining companies, further pushing the industry into centralized cryptocurrency mining.

On the other hand, a leader in the ASIC production Bitmain has been consistently expanding its operations around the globe. As part of their strategy, the company has been purchasing bitcoins consistently, gathering necessary funds to expand the equipment portfolio. With NVIDIA quietly exiting the industry, Bitmain plans to add a new generation of Antminers according to Reuters. Apart from Bitmain, its competitors, Canaan Inc., and Ebang International Holdings introduced their own IPO plans to expand into the mining business.

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