is centralized cryptocurrency mining an issue for the entire cryptocurrency market space?

Charlotte Miller

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In the virtual era of cryptocurrency mining, ASICs’ utilization is still a significant issue. Many cryptocurrency enthusiasts are familiar with ASIC but don’t know its actual use. ASICs are customized mining machines but can serve two or three other purposes. But in terms of cryptocurrencies, these ASICs are only potential solutions to different hashes. The main job of an ASIC is to overtake a standard GPU in terms of processing power for a better mining experience.

 As per experts, after the arrival of an ASIC specially customized for mining, an explicit virtual coin has declined the profitability of that particular coin from other mining hardware. In this article you will learn how to deal with China’s government-backed cryptocurrency. For example, a company released ASIC for Ethereum mining and if a large number of miners adopt that ASIC miner, its profitability will slump with other mining hardware.

 But it is not entirely accurate as GPU companies have managed to survive so far in the industry, and cryptocurrency mining with GPUs is also very profitable. Let’s look at bitcoin mining becoming centralized and how it impacts the entire mining space. 

click here – How are gigantic cryptocurrency mining pools not helping the marketplace anymore?

Key takeaways!

In the virtual mining era, ASICs have created many issues regarding their usage. 

ASICs are specifically customized processing power that should overtake the standardized GPUs in cryptocurrency mining. 

As discussed above, some experts say that once an ASIC targets a particular cryptocurrency that comes into the marketplace, it diminishes the profitability of mining that particular coin. But it is not utterly true as mining with GPUs of many coins is still profitable even after the arrival of particular ASICs. 

Compared to the GPUs manufacturers, ASIC manufacturers are utterly minor, and such aspects make the cryptocurrency marketplace highly centralized. 

With ASIC being the most powerful mining machine of all time, its manufacturers control the hash rate. 

click here – The Upcoming Future of Virtual Currencies, Especially Bitcoin 

The dominance of Bitmain!

Every cryptocurrency enthusiast is familiar with the dominance of Bitmain in the cryptocurrency marketplace. Bitmain is not merely the largest ASIC manufacturer but also the owner of two leading mining pools, ant pool and BTC top pool. Ant and BTC top pools have managed to remain on the top of this industry due to the upper hand given by their parent company Bitmain. It is tough to believe that these two leading pools have accounted for the creation of nearly half of the blocks on the blockchain in the last half-year. 

Bitmain, the ASIC manufacturer, recently went public, and its estimated net worth is $60 billion. Bitmain has released many ASIC resistant hardware for different cryptocurrencies claiming that there is no energy-efficient yet robust hardware for mining than ASIC resistant hardware. But experts say it is not very challenging to create customized mining hardware that can dominate the existing robust hardware. 

51% Attack Issue!

Bitmain has robust plans and will not stop creating ASIC hardware for cryptocurrency mining. ASIC has turned cryptocurrency mining into a hectic business as other miners are constantly failing to avail profits and losing their money. Now cryptocurrency mining coins like BTC is only worth a shot with ASIC and no other hardware. With ASIC manufacturers being less in number, they are efficient enough to govern more than half of the hashing power on a specific cryptocurrency network. 

If anyone succeeds in governing more than half of the hash rate on a cryptocurrency network, it can destroy the decentralized nature of that particular network. Moreover, after governing the hash rate, the hackers can easily change information present in the blockchain of that particular cryptocurrency network. 

How can the market become decentralized?

The market has become famous for its decentralized attributes, but now centralization of mining is spoiling its reputation. It is not very simple to decentralize the cryptocurrency market as these few ASIC manufacturers have dominated the entire market space entirely. 

But the only solution to decentralize mining is to welcome other ASIC manufacturers and limit the use of ASIC in mining. Otherwise, ASIC manufacturers will continue to develop such machines, and mining will get wholly centralized, which is how mining has turned into a centralized business.