Abstract
Cryptocurrency, a form of digital currency that has an open and decentralized system and uses cryptography to enhance security and control the creation of new units, is touted to be the next step from conventional monetary transactions. Many cryptocurrencies exist today, with Bitcoin being the most prominent of them. Cryptocurrencies are generated by mining, as a fee for validating any transaction. The rate of generating hashes, which validate any transaction, has been increased by the use of specialized machines such as FPGAs and ASICs, running complex hashing algorithms like SHA-256 and Scrypt, thereby leading to faster generation of cryptocurrencies. This arms race for cheaper-yet-efficient machines has been on since the day the first cryptocurrency, Bitcoin, was introduced in 2009. However, with more people venturing into the world of virtual currency, generating hashes for this validation has become far more complex over the years, with miners having to invest huge sums of money on employing multiple high performance ASICs. Thus the value of the currency obtained for finding a hash did not justify the amount of money spent on setting up the machines, the cooling facilities to overcome the enormous amount of heat they produce and electricity required to run them. The next logical step in this is to utilize the power of cloud computing. Miners leasing super computers that generate hashes at astonishing rates that have a high probability of profits, with the same machine being leased to more than one person on a time bound basis is a win-win situation to both the miners, as well as the cloud service providers. This paper throws light on the nuances of cryptocurrency mining process, the traditional machines used for mining, their limitations, about how cloud based mining is the logical next step and the advantage that cloud platform offers over the traditional machines.
Highlights
TO MININGMining is the integral process wherein generation, transmission and validation of transactions of cryptocurrencies is done
This paper throws light on the nuances of cryptocurrency mining process, the traditional machines used for mining, their limitations, about how cloud based mining is the logical step and the advantage that cloud platform offers over the traditional machines
Bitcoin mining network is stuck in a cycle which is driving up its power usage
Summary
Mining is the integral process wherein generation, transmission and validation of transactions of cryptocurrencies is done. It ensures stable, secure and safe propagation of the currency from the payer to payee. Banks that generate physical currency and monitor the transactions require huge infrastructure to function and operate Cryptocurrencies overcome this need by implementing a mining system where people in the network, called 'miners' or 'nodes', monitor and validate transactions which generates currency. Mining eventually boils down to a competition of mathematical puzzles to solve for the reward of coins. This mechanism prevents miners from procuring coins and maintains the fairness of the system. This mechanism prevents miners from procuring coins and maintains the fairness of the system. [1][2][3][4]
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