The rise in bitcoin value attracted the attention of the entire world. People from all over the world saw the potential that the blockchain based currency had. With dozens of startups and service-based businesses starting up based on the technology, it became clear that the future of trade could very well be through blockchain. The technology also gave inspiration to new ideas, services and products that combined together to provide a new age of technology.
With the popularity of bitcoin people began to find ways to get their hands on as many as they could trade. People became infatuated with bitcoin mining, and there was an increase in the sale of ASIC And GPU miners globally.
5 Problems that could be a problem for miners in 2023
The increase in mining meant that hardware companies were producing specialized heavy-duty miners. Investors took on bitcoin mining as a permanent job which resulted in many people setting up large scale mining rigs. The popularity has attracted many people to mine crypto, which is gradually increasing. As you read on you will find a few challenges that miners may face in the coming year.
1. Energy Crisis
Perhaps the largest problem that will be of great challenge to crypto miners is the energy crisis that is arising worldwide. Almost any problem in the world leads to an increase in energy prices which creates major problems for the economy. The recent example of Russia Ukraine conflict is the perfect example, as the bilateral issues took a major toll on the supply chain of gas and oil. This resulted in lack of gas for private use, ultimately resulting in shortage for commercial usage. The disruption of energy means that certain sectors cannot continue operations as usual.
Crypt Mining relies heavily on the mining rigs running 24/7. A lot of energy goes into making sure that they are running at maximum capacity. Even more energy goes into maintaining the optimal temperature for these machines to be functioning in. For any organization that is looking to set up new mining rigs, or expand existing ones, relying on local electricity will be a major problem. The issue will have to be addressed if the increased use of energy would result in governments increasing electricity prices due to demand, or simply implementing new policies restricting use in the commercial sector.
2. Lack of Hardware
The increase in demand of miners has resulted in two major problems for most mining companies. The first is the fact that with bitcoin mining the increase in demand has also resulted in an increase in prices. In fact, there are very limited companies like crypto miners that are still offering miners at affordable prices. Secondly, the demand does not necessarily mean that manufacturers can mass produce mining hardware. It is not easy to keep up with the innovations required to meet the demand of the market. This means that anyone new to the mining world, or a company looking to expand will have to pre order their machines. They may also have to wait quite a while before they are able to receive their mining rigs.
The long wait can have major impacts on profitability for many miners, as not only will the cost of machines be higher, but they will also be harder to obtain.
3. Climate crisis
Governments around the world are looking for ways to reduce their carbon footprint. Landslides, ice caps melting and floods are all part of the climate change being caused due to the excessive carbon emissions by major industries. Unfortunately, this does mean that there will be limitations and regulations on anyone that is looking to create a mining empire. Large scale crypto mining will see resistance from environmentalists as well as governments. This can cause a major problem for many organizations that are looking to expand as well. Despite this, there are many towns and rural areas that are currently inviting companies to set up mining rigs in their locality. The possibility of the governing body changing their views is always a strong possibility.
The upcoming year could prove to be full of problems for organizations that have a large carbon footprint. With different environmentalists and experts speaking out, this would definitely be a problem that would need to be addressed in 2023.
4. Volatility in Crypto Currency prices
The recent crashes of major crypto currency mining company FTX has led people to believe that crypto currencies are extremely volatile. The truth is that there are many factors that can easily influence crypto currency rates. Changes in opinion of influential people, changes in government policies or a tweet posted as a joke can all have major impacts. The extreme volatility of the prices of these currencies makes them highly unpredictable. This causes major problems in calculating profit/loss while also not providing a clear idea of digital assets that a company may have.
This is a major problem that could cause challenges for many crypto miners. Such major fluctuations in crypto rates could mean that there are months where mining is just not profitable. Unpredictability is not good for any business, and the same can be said for crypto mining. The risk increases drastically with a larger operation and hence is something to watch out for in 2023.
5. Changes in policies
The true objective of bitcoin to be validated and recognized all over the world has been to get the good graces of the government. However, most of the governments have had major problems with the blockchain technology simply because it cannot be regulated. Major restrictions have been put in place by many countries that simply do not favor the digital currency. And those countries that have had a friendly attitude towards crypto currency have set compulsory regulatory terms for trade organizations.
Setting up an entire business around bitcoin mining is extremely expensive. A lot of resources go into making sure that the company is able to be profitable in the near future. The changes in policies when a government changes is always a major threat to such organizations. In those countries where elections take place every couple of years it becomes incredibly difficult for policies to remain the same. It is for this reason that cryptocurrency mining in UAE is preferred. While on the other hand, with varying views coming into power, not everyone may agree that crypto assets are the future of commerce.
Conclusion
There are definitely a lot of upsides to having a crypto mining business. The potential is huge, and earning in a digital currency provides many upsides to the organization. However, there are also major problems that must be addressed to efficiently ensure the smooth daily business ongoing. The problems above were not present 5 years back as the density of crypto miners were limited. However, with the increase in bitcoin miners around the globe, the problems are more serious than ever. Despite the size of the mining rig that you have planned to set, you will have to find the solutions to each of the problems mentioned.
There are many straightforward solutions that may add to the cost of your business, but will definitely help in solving the problem. Planning ahead, introducing renewable energy as the primary source of energy for consumption and choosing the location of mining rigs carefully are all the ways that can allow a company to increase efficiency and profitability in 2023.
