Now, China has been cracking down on crypto mining intending to reduce its carbon emissions and prevent money laundering. The country has also banned banks from offering services to digital currency transactions. It could have been a blessing in disguise for crypto enthusiasts in India, but the lack of basic infrastructure and regulations is holding them back from going down the crypto mining path.
While many crypto enthusiasts invest in digital currencies in India, there aren’t many interested in mining them. Let’s understand why.
What Is Crypto Mining?
Crypto mining is a process that puts new cryptocurrencies into circulation by solving cryptographic math equations using high-end computers. Mining also involves validating data blocks and adding transaction records to a public ledger commonly known as a blockchain.
Simply put, crypto mining is a transactional process that requires sophisticated computers to crunch complex numbers and record data to a blockchain. A whole network of devices is required for mining cryptocurrencies and keeping shared records through those blockchains.
The process of mining cryptocurrency is by no means an easy task. Though to a crypto enthusiast’s relief, it’s not necessary to have any technical know-how, as there are a few mining software available. However, the hardware required to mine cryptocurrencies can burn a hole in your pocket. Besides, be prepared to pay heavy electricity bills.
Why The Sudden Uptick In Crypto Mining?
The biggest takeaway of mining is to earn cryptocurrency without having to invest money for it. For instance, Bitcoin miners are rewarded with Bitcoin for completing “blocks” of verified transactions. These transactions are then added to the blockchain.
The biggest draw for most mining activities is the prospect of being rewarded. The first miner to find a solution to a complex math puzzle gets heavily rewarded. They either use a GPU (graphics processing unit) or an application-specific integrated circuit (ASIC) to build their mining rigs.
The rewards that miners get are the prime factor that motivates them to keep the primary purpose of mining in check — legitimizing and monitoring cryptocurrency transactions to ensure their validity. It’s imperative because most cryptocurrencies are “decentralized” and do not depend on any governments or central banks to regulate them.
That said, it’s not necessary to be a miner to get hold of cryptocurrency tokens. Several platforms enable users to buy and trade digital currencies. However, due to the volatile nature of the cryptocurrency market, it’s always advised to be cautious while making purchases.
Crypto Mining Challenges In India
In the last couple of years, India has witnessed a surge in the number of cryptocurrency investors. The country also saw some companies such as Easyfi Network coming up with mining and blockchain facilities. However, crypto mining in India comes with its fair share of risks. To begin with, India is yet to have concrete regulations for the use of digital currencies, throwing off many potential investors.
Besides, the Government of India hasn’t been in complete favor of the budding technology and has barred banks from accepting such transactions. The import of ASCI machines was also banned in the country, forcing blockchain companies to halt their crypto mining operations. This has left crypto investors with a constant fear of a sudden crackdown from the authorities.
Apart from these factors, India also fails to provide an ideal infrastructure to mine cryptocurrencies. Since mining requires huge amounts of energy, installing a blockchain pool in the country could be hefty. Also, the average annual cost of electricity per kilowatt-hour in India is higher when compared to other parts of the world where crypto mining is practiced.
The cost of electricity in the country might come in the way of miners in making profits, but the use of renewable energy could bring the cost down. Besides, rewarding miners could be another way to encourage the development of a cryptocurrency ecosystem in the country.