One of the selling points for cryptocurrencies is that they democratize the manufacturing of money. Instead of a centralized authority producing real cash, anybody with a computer and an Internet connection may participate in the process. In theory, at least.
The present cryptocurrency reality is far from ideal. At the time of writing, the electricity generated by the bitcoin network’s millions of computers is comparable to what Denmark uses yearly. Mining bitcoin is financially unsustainable for many regular users due to the magnitude and power of mining operations, not to mention the technical knowledge and experience necessary to become involved.
However, a new business is attempting to turn that relationship on its head. Coinmine, a Los Angeles, California-based firm, is developing a gadget that it claims will make cryptocurrency mining accessible to the general public. The startup promises that their $799 gadget would bring “a new degree of accessibility into an often complicated activity, and makes crypto simple for everyone.”
Coinmine is developing a physical gadget as well as a phone application to provide this plug-and-play accessibility. The hardware gadget handles the actual mining, which requires a power outlet and a local WiFi connection, while the app allows users to choose between several cryptocurrencies for mining depending on market fluctuations. Mining will be powered by the device’s operating system, MineOS. Coinmine will initially enable mining for Ethereum, Monero, Zcash, and Ethereum Classic. It will also be compatible with bitcoin’s Lightning Network, allowing users to earn fees by routing transactions on the cryptocurrency’s blockchain. Coinmine will take a 5% share of each mining transaction. The firm has already garnered $2 million in funding from prominent investors such as CoinbaseVentures and Arrington Capital.
Will Coinmine Be Profitable for Users?
Given the drop in bitcoin values this year, that may be a legitimate question to pose to Coinmine. Futurism, an online journal, entered typical power costs in the United States and current cryptocurrency values into an online calculator and discovered that, at current rates, consumers would earn zero gains from utilizing the gadget. Mine for Ethereum will earn you $1.37 per month, while mining for Monero will earn you $0.70 per month. Users mining Ethereum Classic will incur losses.
In reaction to the Futurism piece, Coinmine CEO Farbood Nivi said that the gadget would support cryptocurrencies immediately after their introduction and before they are listed on cryptocurrency exchanges in the future. This implies that users may perform their research on a prospective cryptocurrency and start mining it before it is published on an exchange (and its price rises) to benefit.
A lot of additional questions have still to be addressed. Some jurisdictions, including as Washington, are already proposing new cryptocurrency mining rate structures, which would likely reduce mining profitability even more. There is also the larger issue of sustaining mining for cryptocurrencies with centralized mining operations. Individual miners that become market participants are at the mercy of huge mining companies that control the availability of cryptocurrencies in the market. It has to be seen if this can be a long-term sustainable and lucrative proposition for individual miners.
Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is very dangerous and speculative, and this article is not a suggestion by Investopedia or the author to do so. Because every person’s circumstance is different, a knowledgeable specialist should always be contacted before making any financial choices. Investopedia makes no guarantees or warranties about the accuracy or timeliness of the information provided on this site. The author owns 0.21 Bitcoin and 1 Litecoin as of the day this post was published.
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