The Potential Impacts Of Bitcoin Mining Centralization
Centralization is detrimental to cryptocurrencies because it is associated with injustice and a great deal of foul play. It’s natural, given the increasing competition within the crypto ecosystem. Now that cryptocurrency mining has grown to be a multibillion-dollar industry, individuals and organisations with massive amounts of infrastructure and hashing power are usurping it.
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What will be the consequences of China’s cryptocurrency ban on the offset of the network validators’ geographical centres?
While centralization appears to be a natural process motivated by competition, it has derailed Bitcoin by diverting it from its intended path. Prior to the ban, the vast majority of the world’s largest crypto mining pools were based in and controlled by China. This was due to the fact that the country’s energy prices were lower than those in other countries.
While mining pools do have geographical boundaries, Bitcoin miners and their associated mining hardware do not. Their hash rate may also follow them wherever they go, implying that these miners’ positions may change in response to certain factors.
As a result, pundits prefer to view mining pool hash rates as a composite of multiple controllable and manipulable monolithic blocks. They view it as a marketplace and an accumulator capable of inspiring loyalty.
If the rewards or technical environment change at any point in time, it is possible that the focus and activity will shift to mining pools in Europe, North America, and other parts of the world.
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Which outliers can be identified by monitoring the hash rate in a single geographic impact area?
For a long time, China was the pillar of the cryptocurrency industry, accounting for between 60% and 80% of global BTC mining. However, the ban resulted in the network losing over 50% of its hash rate.
Following China’s cryptocurrency ban, the first outlier was that other countries were surpassing China in terms of mining. This is because the ban effectively eliminated the presence of more than half of the world’s miners.
Another outlier was rising electricity costs in countries such as Germany, which consumed ten times as much energy as China ever did.
The cryptocurrency market has seen a 101.44 per cent increase in the BTC hash rate since June of last year. The fuel switch was prompted by China’s crackdown on cryptocurrency mining, which resulted in a deviation from the normal BTC mining balance.
Among the first indicators of this shift was a 38% decline in global network hash rate, which corresponded to China’s prior hash rate share. This indicates that nearly all Chinese miners shelved or downed their tools at the same time.
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How GMT intends to address it
We briefly mentioned GMT Token last year. This project has the potential to revolutionise the cryptocurrency ecosystem by removing the need for Bitcoin enthusiasts and miners to purchase, set up, maintain, and upgrade equipment. The project has delegated this responsibility to their trustworthy service centres, leaving GMT token holders with no choice but to passively earn BTC.
Due to the fact that GMT does not experience significant fluctuations as a result of transitory market conditions, BTC incentives will be paid regardless of market conditions. Web 3.0 is expected to address the critical issues currently confronting the centralised Internet, and GMT is committed to contributing to and resolving these issues through the new technology.
When it joined the Bitcoin Mining Council (BMC) in November, it joined well-known bitcoin mining companies such as Core Scientific and Hive, as well as 28 other members, to demonstrate its commitment to industry transparency while also sharing best practices and educating the general public about the benefits of Bitcoin and mining.
GMT’s goal is to acquire 20% of the world’s Bitcoin mining, which will be possible if additional players in the mining market join the mining. GMT is expected to allow miners to store their equipment in the data centre in exchange for a proportional amount of GMT tokens proportional to the token supply capacity.
For the GMT team, burning tokens has almost become a tradition. As a result, it will no longer be an anomaly in the future. After the distribution, a portion of the new tokens will be burned (it is critical to note that the team will burn only its own tokens, not the holders’). The capacity released will be distributed evenly among all GMTs in circulation.
As a result, each GMT’s supply capacity and mining capability will increase. By allowing additional participants to join the project, the GMT token will develop into a unique ecosystem that will connect the GMT mining members. According to our calculations (the GMT team has not yet responded to our request for comment), the GMT token’s value is expected to rise to $1.5 in the next 12 months.
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The decentralised computing capacity of GMT will continue to grow as new equipment is installed in GMT data centres located throughout the world (not just in one country). Due to the fact that GMT is not yet operational in the United States, large miners from other countries joining the project may displace American miners from the global hash rate.
The GMT token’s “bridge” feature enables users to easily transfer their tokens between the ERC-20 and BEP-20 standards. GMT is currently listed on Bittrex, one of the most popular exchanges, and GMT anticipates listing on a number of additional exchanges in the near future. Supported by a prominent sports figure: Khabib Nurmagomedov, the undefeated UFC champion, serves as the GMT token’s ambassador, ensuring global recognition and transparency.
Token holders are relieved of the burden of purchasing, configuring, and maintaining equipment, as well as finding a suitable location for it. Users may begin mining within 24 hours of purchasing a token. Unlike hardware, the token is extremely liquid. It takes only a few minutes to sell a token, and there are no additional costs.
Users are not required to keep track of their equipment’s maintenance. The GMT team monitors the hash rate stability of devices. If multiple devices fail, the GMT team will deploy backup equipment.
One of the primary distinctions between GMTs and other tokens is that each is backed by actual computer power (measured in teraflops per second). GMT is committed to long-term growth and environmental stewardship. GMT data centres now receive a portion of their electricity from hydroelectric power plants and wind turbines. Sustainable energy consumption will be a primary objective going forward in order to have the fewest possible environmental impacts.
Thus, it appears as though a plethora of new projects enter the market every day, and some of them are even aimed at global changes, such as increasing the distribution of total hash rate or reducing the environmental impact of mining. While it is unknown what such initiatives will ultimately accomplish on a global scale, the mere existence of such projects inspires a certain amount of optimism within the crypto community.
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