Problems
There are misconceptions in the general public that bitcoin and other PoW cryptocurrencies harms our environment due to its highly intensive computing power. This statement is partially true, although about 62% of the bitcoin mining operation is currently using renewable energy.
Bitcoin miners are essential parts of the bitcoin network and incentivized for their contributions, hence it should be a profitable business.
But in reality — there are many moving parts; sourcing the components, assembling hardware, installing and tweaking the mining software, maximizing yield, and managing the operation.
There are also regulatory problems and high electricity costs in some countries, making it impossible for ordinary people to participate in mining.
The problem with renewable energy is mostly not about the supply but geographical mismatch. For example; in the area where we can get the most power from hydropower, there are not much demand because people just don't live there.
2 problems arising from this situation:
- Capital inefficiency because most of the expenses go to building the infrastructure to supply the power to the demand area, not the power plant itself.
- Slower adoption of renewable energy because simply there's no point in building the power plant if there's no immediate demand.
In the early days, anyone can mine bitcoin using their home computers. But today — to be profitable, bitcoin mining requires high end specialized ASIC hardware costs thousands of dollars.
Putting your money to buy mining contract need high level of trust since it is possible that miners shut down the operation while already fully paid.
Cloud mining platforms have the long history of being dishonest and sometimes even just as a facade of a ponzi scheme.
