The entire philosophy underlying blockchain is to decentralize information storage, and the technology itself does that pretty well. However, there’s one problem in this whole system that we forgot to consider — people. If you think about it, we are social beings, and we like to join forces to do things together, even if that means building huge cryptocurrency mining farms.
this is the problem with blockchain today, so we need to explore it further and see how we can fix it.
75% of All Mining Farms Are Located in Five Countries
There are many crypto farms around the globe, but the fact remains that the majority of the largest ones are in countries such as the USA, China, and Russia. These farms are not often owned by just one person but are a result of several people joining their access to computing power.
Dalian Cryptofarm, for example, is one of the largest mining farms in the world, and it is located in Dalian, China. It is even possible to choose a mining package according to your preferences and invest small amounts to gain profit from mining in Dalian. The last time we checked, Dalian’s hash rate was 360,000 TH, with a monthly energy cost of more than $1,170,000. The result is mining 750 bitcoins a month (which should reduce after halving and all the subsequent halvings). As it turns out, this farm mines 3% of all bitcoins, which is a very significant amount of money.
But we’ve already witnessed the Chinese government’s aggressive stance on cryptocurrencies. In other words, we don’t know their next move, and there’s always a tiny chance that the government can just shut down crypto mining farms, including the one in Dalian. If this happens, billions of dollars in BTC could be lost instantly.
Even though it’s more likely to happen in China, it could also happen in the USA or Russia. Big crypto mining farms are polluters, and governments simply don’t like them. If they decide that the farms are too much of a threat, they might not shut them down immediately but will find a way to reduce their operations.
All in all, a decentralized network should rely on any single entity, and it seems that Bitcoin is moving in that direction, as mining farms are getting bigger and the network requires more computing power.
What Can We Do About It?
There are several solutions to this. At the moment, some cryptocurrencies are switching to a Proof-of-Stake consensus mechanism, which will end the need for high computing power, which is a good thing for the environment. However, there are no indications that Bitcoin will ever change, and it’s still the largest and the most popular crypto.
But there are issues with Proof of Stake as well. People are already creating investment pools where they can collectively stake their funds in the hope of a bigger profit. If such funds become too large, we will once again head towards centralization.
Another way to solve this is to end crypto mining farms and return mining to individuals and small groups. There are already some initiatives for this, such as tomi’s MP1 mini supercomputer, which is designed to act as a micro-server and can be easily connected with other computers of the same kind, creating small but effective crypto mining clusters. In addition to crypto, MP1 can offer many different cloud computing services, including complex simulations, accelerated AI, real-time ray tracing, photorealistic rendering, and much more. The startup is currently working on developing the MP1 project.
Final Thoughts
No new technology is bad. As we have seen on many occasions, the way we use and apply it can make it harmful. This also applies to the blockchain, which has provided us with an excellent opportunity to make the world more decentralized, and, thus, more fair and trustworthy.
However, we still need to upgrade it and everything that follows it to achieve true decentralization rather than just finding workarounds back to centralization, which is what the big mining farms ultimately are. Even if they follow all the decentralization rules, they still rely on the stance of highly-centralized organizations we call governments.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.