Cryptocurrency Hard Drive Mining
We have heard that cryptocurrency hard drive mining became very popular over the last few years. Once the market starts moving higher, investors want to buy ASIC miners and start mining digital assets. However, these ASIC miners are usually very expensive and consume a lot of energy.
Mining with hard drive is something different and relatively unexplored in the crypto market. Although there are some projects trying to offer new mining solutions, cryptocurrency hard drive mining didn’t reach a large number of users.
What is Cryptocurrency Mining?
Cryptocurrency mining is an economic activity that takes place in the virtual currency market on digital assets with a consensus algorithm called Proof-of-Work (PoW). This mining protocol that is currently used by Bitcoin (BTC) or Litecoin (LTC) consumes a lot of energy and also protects the network.
In order to mine both Bitcoin and Litecoin or some other PoW digital assets, it is necessary to use ASIC miners. Some PoW digital currencies do not need ASIC miners but GPU mining, which is less energy-intensive.
Miners solve complicated puzzles in order to find a block with transactions. When they do that, they process and confirm the transactions included on that block. In this way, transactions on the network are confirmed and the blockchain continues to move forward.
Miners get paid for their services with new coins and the fees paid by the user. When we process a transaction using PoW blockchain networks, we pay a small fee. Depending on the network we use, the fee will be higher or lower. On the Bitcoin network, fees are very high. On the Litecoin network fees are very low.
When a miner finds a block on the Bitcoin network, it is rewarded with 6.25 BTC + transaction fees. Considering that mining on the Bitcoin network is certainly complicated due to a large number of miners, participants gather in mining pools to increase their chances of mining a block.
However, there are other types of mining and consensus algorithms. Proof-of-Stake (PoS) networks do not require users to buy expensive machines but to deposit coins on a wallet and process transactions and get rewarded according to their stake.
In recent years, hard drive mining became also an alternative solution to traditional mining. However, it is not yet a mainstream activity.
What is Hard Drive Mining?
Hard drive mining is a mining activity that consists of mining a digital asset using hard drives. Some of these digital assets use a Proof-of-Capacity (PoC) consensus mechanisms in order to process transactions.
Through the PoC, miners compute large data sets that are saved on the users’ computer. This is a less energy-expensive mining method compared to Proof-of-Work blockchain networks. The energy requirements are minimal and there are some digital assets that have already implemented these solutions.
Hard drive mining is still in its early days and it might take some time before large projects are released to the market. Indeed, most of the crypto projects that are using hard drive mining are usually concepts that do not have large communities or impact on the crypto market.
Thus, the hard drive mining proposal is far from being one of the main consensus algorithms such as Proof of Work or Proof of Stake. This might be related to the fact that it is not as efficient or as profitable to use a hard drive for mining rig.
At the moment, the potential of this type of mining is limited. Even those that want to rent their free space could find better rates for doing other types of activities online. We will get into the details later in the article.
Thus, hard drive mining could eventually become an alternative to PoW and PoS in the future. In order for this to happen, projects that are working with this implementation should show that they are efficient and that could economically be a better and competitive solution to PoW and PoS.
Hard Drive Mining Rig
We have heard about mining rigs and how they work. Most of them include different shelves that allow users to place their GPUs or ASIC miners. The larger the mining rig you have for your Proof of Work cryptocurrency, the larger your hash rate would be.
When we talk about a mining rig, we also need to take into consideration that they make it easier for a user to ventilate the machines, protect them, make them run, organize them, refrigerate them and control them. Thus, using a mining rig for PoW mining is very important.
PoS users do not even need to use a mining rig. Why? Because they do not require equipment or machines to process transactions. Everything is done by using a wallet and coins they have deposited on it.
But what about hard drive mining rigs? The first thing we should know is that this type of mining procedure is not mainstream yet. This is why there might not be hard drive mining rigs available online. If you are lucky enough to find one, you might not even need it if you are a small or retail investor.
Several users prefer to improve their PoW rigs by doing them at home or with their own specifications. This is something that could be more suitable for hard drive miners that want to keep their hard drives ordered and protected at all times. Nevertheless, as we mentioned before, it might not be easy to find hard drive miners out there, at least now.
Advantages and Disadvantages of Hard Drive Mining
There are many advantages and disadvantages of hard drive mining. The same happens with PoW or PoS blockchain networks and mining activities. There are positive and negative things about using this consensus algorithm.
Although there are some advantages and disadvantages, we should wait until more cryptocurrencies start implementing this type of consensus algorith. Hard drive mining should expand to more users and blockchain networks for us to be able to identify a larger set of advantages and disadvantages.
In the next two sections, you can get some detailed information about which are the hard drive mining pros and cons.
Advantages of Hard Drive Mining
These are some of hard drive mining advantages. However, depending on your needs, you might add other benefits to the list.
- It is cheaper than Proof of Work mining
- There is less noise than using ASIC miners
- Hard drive mining consumes less energy
- It might be an innovative way to mine virtual currencies
- There is a lot of potential avialable for this type of mining
Disadvantages of Hard Drive Mining
These are some of hard drive mining disadvantages. As we already said, it is always important that you would analyse your positive and negative things about mining with a hard drive.
- There are few projects working with hard drive mining
- The experience we have is very limited
- We do not know other types of applications for this type of mining
Hard Drive Mining Coins
There are at least two hard drive mining coins available in the cryptocurrency market. However, they didn’t have hype or positive comments. Thus, we also do not know a lot about these projects and how they could interact with other crypto and blockchain solutions.
In the future, there might be a larger number of coins using hard drive mining. Everything would depend on the expansion of the market and the experience these few projects have. The main question blockchain developers should answer is whether there is a need to implement hard drive mining and whether there are advantages related to it compared to the most common consensus algorithms (PoS and PoW).
This is the list of coins that use hard drive mining to power their operations.
Sia is known for being a decentralized blockchain network that uses underutilized hard drive storage space. In order to operate, this blockchain network created the Sia Storage Platform in order to trade data storage. In this way, users can enjoy a free market where they could pay for storage to deposit information and get it once they need it.
One of the benefits of using the Sia network is related to the lower costs it has for users. That means that it is easier and cheaper for users to get access to decentralized storage solutions rather than using centralized cloud storage services.
It is worth taking into consideration that users hold their private keys. That means that you are the real owner of your funds. Additionally, there is no outside entity that could get access to your data on the Sia blockchain network.
Thus, with the Sia project, users can rent out unused hard drive space. Nowadays, it is clear that networks and individuals require a large amount of space to store even larger images, better content, videos and more. In addition to it, users could also sell their space if they have storage that is not being used.
With your hard drive, you share a part of the space you have with other users. This allows them to store their files in a decentralized and secure way. Those that sell the storage can decide which rates they charge for this renting.
The network works with the Siacon (SC) digital asset that works as a utility token. With it, users can pay for the trades they do on this platform. The larger the network, the larger the price of the coin (as there is a large demand for it).
Burst is a cryptocurrency project that claims to be “the pioneer of proof of capacity.” Additionally, they claim to be an eco-friendly blockchain network compared to PoW. The Burstcoin (BURST) network allows you to communicate with other parties (businesses or individuals) to do business or even sign contracts. Through this decentralized and open-source platform, users can easily get access to the services they need.
As we mentioned, Bitcoin and PoW networks consume large amounts of energy to operate. Indeed, Bitcoin consumption reached the level of a medium country such as Finland or Argentina. With the Burst network, miners work with a proof of capacity consensus algorithm.
Miners use the free space they have on their hard drives in order to back up the whole network. This hard drive mining project consumes less than Bitcoin and makes it possible for the network to properly operate.
Users can enjoy a wide range of services such as proof of capacity, payment solutions, a token designed to run on this platform, arbitrary messages, smart contract implementation, an alias system and crowd-funding, among other things.
At the moment, there are more than 1.1 million wallets and 411 full nodes operating on this network. Moreover, there have been more than 733 smart contracts created on this blockchain and 416 tokens deployed on top of it.
Hard Drive Mining Calculator
Before starting with hard drive mining, it is necessary to calculate the consumption, rewards and profitability of this consensus algorithm. However, this is something that would change over time and according to your needs.
Depending on the network you operate, the profitability and solutions would be different. For example, Sia would require you to offer or pay a price for space while Burstcoin would reward users that share their hard drive space to conduct the proof of capacity consensus algorithm.
At the same time, the profitability would depend on how much available space you have, how much space you offer to others and the electricity costs of keeping your device turn on 24 hours a day, 7 days a week. In the future, as new projects release their hard drive mining solutions, there could also be hard drive mining calculators.
Is it Profitable to do Hard Drive Coin Mining?
At the moment, most of the users on Reddit claim that it is not profitable to do hard drive mining. This would definitely depend on lots of factors, but most of the users claim that it is not even worth the effort to start doing hard drive mining.
In the future, with new projects being released, we might find better solutions and larger profitability. One thing is clear, the larger the blockchain community, the easier it would be to find out some solutions to do hard drive mining. Everything would depend on the needs of different blockchain companies and how hard drive mining could become a reliable option to proof of work and proof of stake consensus algorithms.
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