As we approach the end of the decade — it seems appropriate to reflect on the evolution of Crypto mining and see just how far we’ve come.
Crypto mining was initially conducted primarily by hobbyists using existing computers/computing power. These machines were general purpose and not optimized for mining — using their GPU chips to run the mining algorithm. In addition most of these machines were run at home using retail power infrastructure. However, as the difficulty was so low (dictated by computing power on the network) it was worthwhile for everyone to participate.
In 2013, Application-Specific Integrated Circuit (ASIC) miners were first designed and released. ASIC miners were very power efficient as they were manufactured for the specific purpose (hence the name) of mining Bitcoin. ASICs were quickly adopted as they vastly outperformed the previous technology and started an arms race to develop incrementally higher performance ASICs. On a log-scale, it is clear from 2013 that the hash rate began to increase dramatically as this adoption took place.
Today, it is no longer profitable to mine at home using a GPU and retail power. Since December 2017 the hash rate has increased around 10x, increasing the difficulty and reducing the share of rewards for miners. Now Cosmos Energy Group and other companies like us are developing industrial scale operations using commercial sites, low cost power and the latest ASIC hardware. This combination of increasingly sophisticated software, lower power costs and capital investment has had a dramatic effect on the hash rate.
In my role as the CEO of Cosmos Energy Group, we have seen first hand the dramatic changes in the sophistication and technology used to mine Bitcoin. While everyday investors and enthusiasts (we call them artesian miners) are still able to invest in hardware and mine BTC, the reality is as the BTC market experiences increased difficulty and greater total installed hash rates, to mine in a small scale become less profitable. Because of this, we continue to see a shift towards larger commercial operations such as those operated by Cosmos, Hut8, Bitfury, Bitmain etc.
Seperately to the emergance of large scale miners, we are further excited and encouraged to see the continued adoption and acceptance by larger financial institutions (NYSE, CBOE etc) entering the space. We believe that as the market continues to grow up, the impact of these institutions participating in the Bitcoin and other Crypto-markets will ultimately underpin the sucess and survival of digital assets as an independent asset class.