Cryptocurrency is based upon decentralized finance (DeFi) mechanism. Hence, mining is essential for the validation of new coins entered into circulation. But, crypto mining is a costly process provided that a miner has to break the bank to purchase the required hardware for the process.
Until recently, crypto mining could earn you a moderate-income by performing in the competitive process of adding and verifying new transactions to the blockchain. Leading cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) use this process of mining containing the proof-of-work (PoW) algorithm. But, after the advent of highly expensive Application-specific Integrated Circuits (ASICs), things changed.
Previously, graphic processing units (GPUs), and even sometimes PCs were enough to perform the mining process conveniently at a reasonable cost. But, as miners swamped into the field, the competition grew harder, the difficulty higher, paving the way for the emergence of better technologies. The advent of ASICs generated the remarkable issue of equipment availability.
In 2021, the involvement of a greater number of miners caused disruptions to blockchain in the industry of cryptocurrency exchange. Increasing demands of mining equipment led to the scarcity of GPU cards in mid-2021. And the few ones available in the market were illogically priced.
Consequently, the cost of Bitcoin and Ethereum dropped at the end of January 2022 to their lowest levels since July 2021. This price-fall heavily affected mining making it even less profitable. Furthermore, there occurred a threat of bans in various jurisdictions across the globe.
However, we can hope this situation to be changed soon with certain companies taking initiatives to cope with the equipment-unavailability issue, and with the recent-popular reselling of the potential mining hardware.
