You’ve no doubt heard at least some mutterings about how you can change your life with a small investment into a form of cryptocurrency. Whether it’s Bitcoin, Dogecoin or Etherium, everyone is looking to get the maximum amount of money with the minimal amount of effort. But what is Cryptocurrency, how is it obtained and what are the ongoing challenges?
What is Cryptocurrency and how is it obtained?
Simply put, it’s an unregulated, new type of currency that exists purely in a metaphorical sense. There’s nothing to hold like with normal money, and it’s obtained by mining the information given and received via online transactions. This is known as a blockchain and exists to secure the transaction between two or more sources. Obtaining this information requires huge resources when it comes to memory as the information needs to be found, and obtained meaning that traditional single PC setups may have worked initially because there were plenty to be found, but now because of the saturation of people mining for the data, it’s harder to find.
What are the ongoing challenges?
There are multiple issues facing cryptocurrency. The first, and something we’re somewhat of an expert in, is the power consumption. Now that there is a requirement for “server farms” this takes a huge amount of power and unless the users setup is vast, the returns against the power cost are minimal. This means that as a data centre with huge power capability we do receive enquiries about hosting cryptocurrency server farms. While we could in theory, there’s more to power than just “price per kwh” as we offer award winning resilience too, and provide support for our service. Typically users just want a cheaper method to run their farms and don’t care about the extras you’d receive by using a data centre.
There’s also huge hardware limitations, causing massive widespread issues. GPUs have advanced to the point now where they have more VRAM in a format that doesn’t require processor power as RAM would, meaning that it is very efficient for data mining. What has caused issues is that people who mine large amounts of data have caused a shortage in supply of GPUs for those who want them for more traditional uses such as their intended purpose – gaming. What manufacturers have tried to do in this instance is to reduce the capabilities of their cards, but these are often worked around and now when new GPUs release they’re sold in a matter of seconds to people who set up large scale purchasing “bots” seeking to utilise them for crypto mining.
The volatility of the currency is also something that has caused widespread issues across multiple markets. Being unregulated, it means that it is highly volatile to change. Bitcoin itself has seen its price skyrocket in the years since its inception. One Bitcoin in 2015 was worth £215. Now that same Bitcoin is worth £32,000. The meteoric rise of that particular currency gave rise to multiple others, with their lack of regulation seeing huge fluctuations in price. No longer was it a given that everything would increase just by existing – some coins have failed, some have succeeded. Unfortunately they are so volatile that one tweet from an influencer (Elon Musk for example) can result in losses or gains in that particular cryptocurrency. For example, Elon took an interest in Dogecoin back in May 2021, causing its price to increase by almost 200% to then fall by a greater amount when it transpired he was “only joking”.
It’s a highly volatile market and while there are multiple cryptocurrencies that continue to increase in value, it’s only a matter of time before real world financial markets learn how to regulate the market. The ongoing obsession with power and capability of technology could cause the markets to crash and the efforts of GPU manufacturers to limit the exploitation of their hardware at the cost of customer satisfaction could be a large shift. There’s also a finite amount of transactional data available so while it’s here to stay, the boom period has surely passed.
To speak to us about hosting, power or any form of IT services your business may require, please get in touch on 0161 498 1200.