Crypto mining is one of the core principles of the blockchain space. Though several laypeople, investors, and crypto enthusiasts would like to paint a picture of miners sitting atop hoards of digital gold. The reality of the mining industry is that mining equipment and infrastructure costs much money and are often challenging to implement.
The mining industry is a lucrative one, and when mining equipment is working well, early-bird miners can take home at least 50% of the total revenue from their work. But the industry is plagued by a demand-supply imbalance problem, one that remains the root of other issues the industry faces.
A mining rig is often a combination of a motherboard with several connectors linked with GPU cards or Application-specific integrated circuit (ASIC) machines and a powerful hard disk drive. The ASIC machine has a chip that is required to make it run, and for a few years, there has been a worldwide shortage of this type of chip.
Bitcoin mining is often a largescale venture involving huge server rooms full of mining rigs running in sync. These mining rigs validate and resolve complex transaction code through a Proof-of-Work system, adding the transaction to a “block” and allowing it to be carried out seamlessly in the Blockchain. The process of validation creates additional newly minted bitcoin and rewards validators with it.
Even Digital Mining has its Fair Share of Problems.
Bitmain is one of the largest suppliers of mining rigs in the crypto space, and they have reported that they are sold out till august 2021. Bitmain is just one example out of a multitude of them, and the crypto industry hasn’t been the only one affected by this shortage too. Every industry that relies on mining machines or the chips they work with has slowed to a crawl as the prices of chips continue to skyrocket.
As Bybit notes in a recent blog post, the chip shortage for Bitcoin mining gear is projected to last till 2023. As manufacturers like TSMC and Samsung struggle to keep up with a sudden skyrocketing demand for hardware, Bitcoin mining operations face a cold front from manufacturers, who do not trust the volatile reputation of crypto mining and the crypto world.
Primary mining operations can afford to pay the prohibitive electricity bills and afford the expensive mining rigs, but what about smaller operations? New entrants to the crypto mining business are forced to buy hand-me-down rigs at high premiums, a situation driving smaller mining operations out of business and uniting the giant players in the crypto mining space.
The high cost of mining isn’t tied to only the expensive costs of rigs, with the average price of electricity in most places capped at $0.09/KwH, which means a net worth (C3) $40,000 to generate one coin. This net cost(C3) includes direct fees (C1), indirect costs, and extra charges required to mint one bitcoin. Even early-bird or pre-2020 miners, who have much cheaper rigs, still shoulder a cost of $20-30,000 to mint one Bitcoin.
Coal and Oil are not Mined the Same way
With Proof-of-work mining looking unsustainable, the future seems shaky for the Blockchains. However, the Bitcoin mining predicament has prompted several parties to seek modern solutions to The Proof-of-Work system. A decentralised consensus system requires several miners (prover) to compete for the chance to verify a transaction for verifiers who add the transaction to a block of them.
Several Bitcoin mining companies have come together with infrastructure-providing entities to boost their mining farms’ hash rate. These infrastructure entities usually supply and repair old mining equipment or provide critical resources like massive electricity sources.
This approach is only short-term in the long run. As mining equipment breaks down irreparably, it’ll drive the cost of existing rigs up, slowly squeezing small-scale miners out of business, and this is why other Blockchains are seeking new alternatives to the old ways of mining.
Ethereum is the second-largest blockchain ecosystem in the world. With a market cap of $297 billion, the cryptocurrency attracts many users due to its volatility and versatility. When crypto’s mining problems began, Ethereum was also affected, though to a minor degree due to its reliance on GPU cards and not ASIC machines. Though the Blockchain is still suffering from a massive scalability issue due to the extremely high number of users; as the coin rapidly gains worldwide popularity.
The success of the Blockchain has led to severe congestion, prompting many platforms and ecosystems to attempt to switch from the Proof-of-Work system to a new Proof-of-Stake (PoS) system. In PoW, miners are more likely to earn and add new blocks to the Blockchain-based on their computational power. PoS uses the amount of money (stake) miners have to determine their chance at achieving and adding new blocks.
Pylon.Finance Changes the Landscape of Ethereum again.
Ethereum and its users have been trying to break away from the problem of Blockchain mining for a while. Fortunately, Ethereum runs on GPU cards, not the more problematic bitcoin ASIC mining gear; they are alternatives meant strictly for Ethereum, making mining Ethereum slightly easier.
Introducing Pylon.finance, a GPU mining project focused on providing a GPU mining asset that is interoperable with the broader crypto market. Pylon.Finance was founded in 2020 by an enigmatic figure known only by the pseudonym Grim Reaper and offered a digital token called $PYLON to yield farmers, a new form of token-based on an actual income stream from GPU mining farms that generate real-world profit.
The company raised an estimated $1.15 million without an ICO or presale investors. The project is entirely crowd-funded and community-driven. The team behind it burned their admin keys the day the coin launched to ensure that no manipulation of funds or tokens can occur, a way to show investors that their funds and investments will stay safe.
This Week at https://t.co/QHCHNHL1bA
43.1 $PYLON total buy back
Mining Seed: (110% APY)
25.9 to LP Vault: (26% APY)
17.2 to $PYLON Vault: (24% APY)
— Pylon Finance (@PylonFinance) April 26, 2021
A Mining Project Owned by the Community, Backed by the Community
Mining profits on Ethereum depend on several factors like network activity, network fee, and the current price of the Ether token. $PYLON is a GPU mined token, which allows the token’s price to remain independent of any other asset on the Ethereum market. $ PYLON’s independence from different Ethereum based tokens makes it impervious to bearish markets or short-term price correction; this means that when the rest of the market fails occasionally, $ PYLON’s value will remain on the rise.
$PYLON provides a KYC-free investment in GPU mining. The actual GPU mining company beneath the token has been running a successful GPU mining operation worth millions of dollars for over six years. Pylon.Finance, the team behind this innovative new mining operation, is the USA’s largest Ether mining operation.
With the $PYLON token, users can maintain stakes or get involved in Liquidity Providers (LP) by staking the PYLON/ETH Uniswap LP token. In return, they enjoy the fees generated to supplement the mining income. With a hash rate of about 1 billion KH/s (kilo hash per second), Pylon.finance remains one of the largest providers of mining service in the world.
Pylon.Finance’s GPU mining farms mine Ethereum transactions and earn ETH rewards from the gas fees. The ETH rewards are used to buy PYLON on the open market, sent to users who have staked $PYLON or PYLON/ETH liquidity pool tokens into the PYLON reserve. This buyback of PYLON from revenue generated outside the Blockchain gives the $PYLON tokens real value.
What’s in Store for the Future of Mining?
With several ASIC using Bitcoin mining companies being forced to adapt painfully to new market conditions, Pylon.Finance stands out of the crowd, a leader and pioneer. There is no doubt their model will soon be copied by several mining gears and Defi protocol providers.
Leading the transition from PoW to PoS on the Ethereum network with their real-world revenue from GPU miners-backed token, Pylon.finance is poised to become a leader in crypto mining worldwide. With several Bitcoin mining companies still stuck in the PoW system, it is hoped that PYLON’s visionary projects will provide a safe and highly lucrative alternative to traditional Crypto mining.