Bitcoin mining is a notoriously intensive process that eats up huge amounts of computing power, often sourced from high-end computer components. This has been evidenced by graphics card producer nVidia’s record $2.46bn revenue at year-end 2017. This represents a 33% increase in graphics card sales, driven by cryptocurrencies thirst for the computational power it lends. Pure energy, too, is being sought in all areas, with CNET reporting that a group of Australian crypto investors had sounded out the idea of reactivating a coal plant – purely for crypto mining.
With the cryptocurrency craze a little quieter, but still growing, having a grasp of the physical barriers to currency growth – and how the industry is addressing those barriers – is an essential makeup of any beginner’s cryptocurrency knowledge base.
Computational power and production levels
One of the biggest physical barriers to the growth of the cryptocurrency industry has been the lack of graphics processing units (GPUs). A specialized personal computer component, top-end GPUs are typically used by high-end computer gamers and creative design professionals who require obscene rendering power. That innate power makes them an excellent proposition for miners, leading to rocketing prices and reduced stocks. Arstechnica report that AMD’s flagship card, the Radeon RX580, increased from $230 to $450 in price since May 2017.
With the potential payoff of cryptocurrency high, tech startups and big business like China’s Antminer and Samsung are now developing cryptocurrency-specific processors and small level miners are using savings and flexible capital from other sources to make a baseline investment in cryptocurrency using these GPUs. This will help to alleviate the pressure on the market due to its intersectionality and boost crypto innovation.
Pure power and energy
According to statistics aggregated by Digiconomist and analyzed by the UK’s Guardian, cryptocurrency is on course to use up 42TWh of energy throughout 2018. For comparison, this places the total energy usage of the cryptocurrency network ahead of the total usage of Hungary and New Zealand each. One way of addressing this is through simply creating more power; as the Australian investors outlined above have explored through a disused coal plant. Clearly, though, environmental friendliness is a huge factor to be considered (nevermind the huge cost), and so innovators are addressing this through green reforms.
One way being mooted to solve the problem is a shift to proof-of-stake, rather than proof-of-work, system. Currently, the ‘proof’ you have of ownership of a bitcoin is through a completed mathematical occasion. According to the Times of India, Ethereum creator Vitalik Buterin has advocated for proof-of-stake. Much like a classic fiat currency, your ownership of the value of a Bitcoin is evidenced by your possession of it, negating a huge amount of proof-of-work’s energy demands.
Cryptocurrency is an exciting financial trend that has brought with it a huge technological and energy infrastructure requirement. Through the actions of the same brains that invented it, reforms are taking place to address these physical barriers to success