- Bitcoin mining changes could make mining more efficient
- It might cost less to mine Bitcoin in the future
- This price drop could actually devalue Bitcoin
Bitcoin mining refers to the production of the Bitcoin cryptocurrency through mining on the blockchain. Mining, much like traditional mining in silver and gold is a process that uses huge amounts of energy to take the product from an embedded body, in this instance, Bitcoin mining allows coins to be produced from raw data that exists within the blockchain.
As you probably know, this process is very resource heavy, it takes a huge amount of time, energy and effort to mine Bitcoin which in turn costs an awful lot of money. As a matter of fact, the cost of mining Bitcoin is often so high that it means users could even spend more mining Bitcoin, than they could ever make back from selling the fruits of their labour. This is exactly why researchers are always looking to find new ways to make Bitcoin mining cheaper, though it seems that this could in turn have an adverse effect on the floor of Bitcoin’s price. The floor simply refers to the lowest price Bitcoin ‘could’ be valued, based on some basic economic principles.
According to new reports, Michael Dubrovsky, a founder of the PoWx foundation, along with other researchers has created a system that they have called HeavyHash, a system that has been designed to make the mining of cryptocurrencies like Bitcoin far cheaper.
According to Forbes, Dubrovsky has said:
"Heavy reliance on electricity has created scalability issues, environmental concerns, and systemic risks. Mining efforts have concentrated in areas with low electricity costs, creating single points of failure. Although proof of work security properties rely on imposing a trivially verifiable economic cost on miners, there is no fundamental reason for it to consist primarily of electricity cost.”
Their solution is one that moves the focus and cost from the energy used, to the equipment used to mine Bitcoin, in a system known as ‘Optical Proof of Work’. The idea here is that miners will invest more in more efficient equipment that in turn helps to make the mining process less power heavy. This concept however is worrying some investors, who feel the introduction of Optical Proof of Work could make the price of Bitcoin sink below $3,000.00.
“If the price of bitcoin mining does move lower as a result of a change to optical proof of work, the bitcoin price could move below the $3,000 it dropped to 12 months ago before miners were forced to switch off their machines. However, some in the Bitcoin and cryptocurrency industry do not expect the bitcoin price to fall as low as it did last year, meaning the price of bitcoin mining might not be tested.”