The Evolution Of Bitcoin Mining
Many who first hear about “bitcoin,” are gravitated towards it because of the price, followed by the underlying “blockchain” technology in distant second. Yet neither of these two mental frameworks would exist without a key part of the entire blockchain ecosystem, which is the mining sector. For the simplicity of this article, we will focus solely on bitcoin mining as an example — even though how we discuss mining is applicable to any other digital asset, whether that’s Ethereum or Dogecoin. They all have the same process, require the same hardware, and are stifled with the same challenges. To use popular term in blockchain these days, the mining process across cryptocurrencies is fungible — which begs the question: “How has mining evolved to where it is at today?”
When Satoshi mined the first bitcoin transaction over 12 years ago, he managed to do it on his personal computer. Keep in mind that this was 2009, when computers and their accompanying hardware possessed far inferior processing powers than they do today. It is safe to assume that all the miners who have entered into the profession since then often dream of a time when mining & verifying hash marks was so simple and more importantly, so cheap.
Since then, not only have the computers evolved throughout a web of complex upgrades ranging from GPU’s in the early 2010’s to the ASIC’s machines a couple years later which laid the groundwork for much of the hardware used today. In fact, the ASIC machines were the first computer hardware created for the sole purpose of mining bitcoin, and outperformed personal GPU’s by a factor of 6x (despite being only 2x as expensive).
Fast forward that to the year 2021, and the industry has again evolved into a giant industrial complex of faceless organizations powered by billions of dollars of investment, strategically located near power reserves. This latter part, the strategic location of bitcoin “mines,” is of vital importance since verifying thousands of lines of codes per second requires massive amount of electricity. Take China for example, the current global leader of both mining hardware and total amount of mining activities measured. Some of the largest and most sophisticated mining organizations are located in remote areas down south, conveniently located near the largest water dam in the world — Three Gorges Dam.
But there has also been a quiet revolution in how bitcoin mining is changing as a service, as opposed to just focusing on the hardware and raw processing speeds. With bitcoin posting a market price north of $50,000, it has never been as lucrative (nor as competitive) to get into mining as miners get rewarded per block verified. This has led to innovation seen in companies like BitDeer, who simplify the proess drastically for individuals who want to get in on the action, or smaller blockchain startups who often don’t have the infrastructure nor funding to be able to set up their own mining far. By offering access virtually through the cloud, BitDeer is able to grant millions of people to mine cryptocurrencies including bitcoin, ether or virtually any other token they wish.
While the industry has been monopolized slowly into a reality where only heavily backed organizations with access to land and cheap electricity from a hardware stand point, there is still ample room for change in terms of granting access or providing mining solutions as a service. This serves as an exciting opportunity for organizations like BitDeer, who can drastically lower the initial startup costs for prospective miners, while granting full access and control over physical infrastructure already set up.