The crypto mining scene has changed dramatically over the last few years. What was once a niche way for tech experts to earn cryptocurrency is now a full-blown business for large organizations. The crypto boom has caused many changes and made people to race to get their hands on the best mining GPUs. To gain insight into how the crypto scene has changed over the years, I spoke with a former professional crypto miner, who chose to remain anonymous, so I'll refer to them as "M" throughout the piece (short for miner).
The evolution of crypto mining
M entered the crypto scene in 2015 like many other people who entered the "second phase" of mining. M's setup began with leftover parts from gaming computers but evolved into 120 graphics cards running on over 20 rigs. At its peak, M's setup had to be in a small warehouse to get three-phase power.
"I started mining in what could be considered the second phase of mining; in phase one, there was very little in the way of software to help with mining, and so it was only accessible for people with a solid background in code and computer skills," M explains. "Over time people created applications and software to make it easier for people to mine. One of these people goes by the alias "Claymore," and it was his software that I started using to mine Ethereum and other coins."
Mining pools were eventually formed, which increased the chances of hitting a block, which is how people earn coins. Now, M and many others refer to crypto mining as in its third phase.
The move to phase three is where crypto mining made a strong shift towards larger setups and bigger businesses. This hurts smaller miners and crypto as a whole, according to M:
Limiting hash rates
Because crypto mining requires powerful hardware, graphics cards are hard to come by these days. NVIDIA recently halved the hash rate of newly manufactured RTX GPUs in an attempt to get RTX cards into the hands of gamers. NVIDIA has also tried other ways to limit hash rate, which M believes is a good thing:
M added, "I'm not saying they should stop making cards for mining, but making cards that are only usable for gaming that are cheaper is a big win for gamers."
While NVIDIA's efforts are welcomed by many, it's questionable how effective they'll be. M explains that "there is already evidence of people finishing workarounds for the hash rate limits, but these things are always cat and mouse, you make a change, then someone finds a way around then rinse and repeat."
To make limits more effective, M explains that companies like NVIDIA need to focus on hardware, rather than software, "The limits need to be at the hardware level, software/bios level restrictions can be "flashed" out where you change the bios on the GPU for better hash rates. "
What could have been
Before letting M go, I had to ask if they spent Bitcoin or another cryptocurrency in their early stages. I've heard too many horror stories about people buying a haircut in the early days of crypto to resist asking. Like many, M isn't immune to looking back and seeing how much they could have made:
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Interesting interview. So why did M give up? You'd think now is the time to mine -- and sell immediately, before the bubble bursts. Even if you're a small fry, if you have the equipment you might as well make money off it while it's still valuable. "Having these large, centralized pools of industrial-scale miners is not good for the security of the network." Yeah but that's the logic of a "currency" that is created by computer processing. It's one of the many, many reasons cryptocurrency makes no sense. The US dollar is backed by the ability of the US government to pay its bills, which, putting aside Ted Cruz, is unquestioned for good reason. Unlike Venezuela, the US has a solid tax base. The US dollar is incredibly stable - even in this environment of massive deficits. And you can do real monetary policy! And make all kinds of purchases in all kinds of places! Same with the Japanese yen and others. Crypto is backed by ... the interest of narcos and hobbyists and the guys that brought you the GameStop and car rental company bubbles. It is a solution in search of a problem, and it's not even a good solution.
Cryptocurrency is supposed to be designed to limit the number of coins, so that over time it gets harder and harder to mine. Also, the more miners, the harder it is to mine. For a small timer, it's not worth the effort any more, especially for the older cryptos like Bitcoin. Unless you have the ability to scale your operations way up.
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