How centralized cryptocurrency is a problem for the rest of the miners?
With the utilization of application-specific integrated circuits in the mining industry, the complex issues of mining are rising. The two utmost famous mining machines are ASIC and GPUs. Of course, one can use graphic processing units for general use like hefty video editing, high-end games etc. But ASICs, on the other hand, come up with a particular use.
The tech industries that majorly use ASICs include space foundations, automobile and cell phones companies. In the cryptocurrency industry, ASIC usually means a mining machine. The developers of ASIC created these machines to overtake the processing power supplied by a standard GPU. ASICs are a thousand folds more potent than a general GPU. Besides being powerful in processing capability, ASICs are also more energy-efficient than a GPU. Click this image below to start your bitcoin journey.
Since specialized ASICs for bitcoin mining have started, bitcoin mining is worthless without an ASIC. Owning an ASIC is not bad at all, but supplying ASICs amongst miners is a bit concerning and complicated. We all know there are hundreds of manufacturers of GPUs and CPUs, but the creators are only a few when it comes to ASICs. The cryptocurrency industry is transforming into a centralized industry because of a significantly fewer number of ASIC manufacturers.
Bitmain is leading the way!
As discussed above, only a few ASIC manufacturers are known and Bitmain is one of these few companies to create ASIC mining machines. Besides releasing specialized bitcoin mining ASICs, Bitmain has specialized machines for almost every coin. Bitmain claims to generate the most potent ASIC hardware till now, but there are some more profitable ASICs in the marketplace. Companies might claim to develop the most efficient hardware for mining a specific coin. But the engineers can continuously develop an improved and more efficient mining machine.
ASIC developers can control 51% of the hash rate!
Whenever a specialized ASIC processor for a specific coin arrives in the market, the profitability of mining that coin decreases when you try to mine the coin without an ASIC. ASIC manufacturers like Bitmain will not stop creating special mining machines that will incline mining profitability for ASIC holders.
As per reports, ASIC developers can efficiently govern more than half of the hash rate on a blockchain. Therefore, if these manufacturers control 51% of the hash rate on a blockchain, these companies can misuse the decentralized feature. Moreover, these companies will potentially alter the transaction record present on the blockchain.
How to decrease the extent of decentralization?
Centralized cryptocurrency mining can create many issues in the cryptocurrency industry. These companies in no time can have the potential of mutating the immutable blockchain of a cryptocurrency. Instead, the community should make ASICs’ distribution and manufacturing a decentralized venture.
There must be more than 10 ASIC manufacturers. The existence of more than 10 ASIC manufacturers in this industry will also plunge the scarcity of ASICs and decline its market value.
More ASIC will lead to an incline in the availability of these mining machines. The community should also impose a new flanged algorithm that can eliminate or dominate the current ASIC miners. These actions will create opportunities for new ASIC manufacturers to enter the market.
Many Savvy cryptocurrency developers forked their digital tokens to restrict the utility to ASIC mining machines up to an extent. But the actions were incredibly pointless as ASICs updated themselves with the new hashing algorithms. All the more, the forking of cryptocurrencies also creates some other significant problems in the network.
The largest virtual coin, bitcoin, was also forked multiple times. In short, forking cannot be the solution to mitigate centralization from this industry. More and more manufacturers should enter the marketplace to weed out centralization from the mining industry. The majority of ASIC developers emerged from China as the raw material, and labour cost in China is significantly less. Setting up an ASIC machine manufacturing plant in any other country is very costly. The ASIC or application-specific integrated are undeniably potentials for mining.
These are the reasons why decentralization should be introduced in the cryptocurrency industry.
