When you think of cryptocurrency mining, what comes to mind? For many, energy inefficiency. And while Bitcoin mining requires a lot of energy, this label doesn’t apply to all cryptocurrency mining. As the blockchain industry innovates, energy efficient cryptocurrency mining opportunities have come to market that anyone can participate and profit from.
Bitcoin Mining’s Energy Efficiency Problem
A decade ago, anyone was able to use their spare computing power to mine Bitcoin. And a lot of people made a lot of money. But unfortunately, those days are long gone, as individuals are now largely shut out of this modern-day gold rush. Bitcoin mining is now dominated by companies and large investors, many of which are publicly traded, effectively creating a computing power arms race which has exasperated Bitcoin’s energy efficiency problem.
The energy issue is tied to Bitcoin’s proof-of-work consensus mechanism, in layman’s terms, the process where computers connected to the blockchain, or nodes, validate the legitimacy of transactions. To reach consensus, blockchain nodes compete to solve complex math equations. The faster the node, the more Bitcoin it can mine which is why energy-consuming computing power is so important in Bitcoin mining.
Energy Efficient Blockchains Are Here
Fortunately, a new consensus mechanism, proof-of-stake, has cracked the energy efficiency issue. With proof-of-stake, each node on the blockchain is required to stake their own cryptocurrency for the privilege to validate transactions. This bypasses the need for more and more computing power, while maintaining security because node operators would have no incentive to fool the blockchain and risk losing their staked cryptocurrency. Blockchains like Algorand, Cardano, and Solana are leading the way in proof of stake, and Ethereum, the second largest blockchain, recently changed their consensus mechanism from proof-of-work to proof-of-stake to solve their energy problem. While this is very good for the blockchain industry, mining on these blockchains requires staking hundreds of thousands or even millions in cryptocurrency, so individuals are again, largely shut out of participating. However, a third consensus mechanism in decentralized wireless space, called proof-of-coverage, has opened new opportunities for individuals to profit from mining once again.
How To Profit From Energy Efficient Cryptocurrency Mining
There’s a new breed of real-world blockchain use cases that require edge computing power and truly distributed deployments, covering large geographies. You can mine cryptocurrency on these blockchains by placing hardware, or a node in the blockchain, in your home or businesses. For example, Helium is a project that has seen huge success, in just a few years building the world’s largest decentralized wireless network. Helium created the proof-of-coverage consensus mechanism for their IoT network (Internet of Things), which ingeniously uses the blockchain to verify that nodes in the network are honestly transmitting a wireless signal from their asserted location on the blockchain. This allows individual consumers to earn Helium’s cryptocurrency (HNT) from the convenience of their home with a device that is the size of a small wireless router and uses the same amount of electricity as a 5-watt light bulb. Another blockchain project consumers can participate in is PlanetWatch, who is building a global air quality sensor network using blockchain and IoT. Currently consumers can get PlanetWatch mining devices in Europe and they will expand to North America in 2022. Learn more about Helium or PlanetWatch here.
This is just the beginning. As more and more blockchain projects require edge compute, a new generation of distributed blockchain infrastructure companies, like Emrit, will help them scale by bringing simplicity to web 3.0 and creating access for the community.