Crowdfunding To Combat Bitcoin Mining Centralization

Bitcoin mining has evolved throughout the years, and the next evolutionary step could just be around the corner. Whereas it used to be profitable to mine Bitcoin with a computer, hardware evolved into FPGAs, and now ASICs. Moreover, there is also the option for cloud mining, although there are a lot of risks attached to these contracts. To keep decentralizing the mining hashpower, crowdsourced mining might be a fascinating idea over the years to come.

Also read: Japanese FinTech group SBI Holdings, joins the Blockchain Consortium R3

Evolving the Bitcoin Mining Game Once Again

TheMerkle_Bitcoin Mining Crowdfunding

The way Bitcoin mining works right now leaves very little room for proper decentralization on a large scale. Granted, mining pools exist around the world, and the miners themselves are not located in one area either. However, more and more mining power is making its way to data centers, as Bitcoin mining at home is all but impossible due to high electricity costs these days.

One way to monetize mining at home is by renting out mining power to other people looking to generate Bitcoins on a pool. Services such as MiningRigRentals will let users do exactly that, as Bitcoin mining hardware owners can set up their own prices for renting the machine. In a way, this creates a bit more decentralization in the mining industry, which is never a bad thing.

But things could be taken one step further, by actively crowdfunding the decentralization of Bitcoin mining. Assuming there would be enough interest from the community, members can pool together funds in a multisignature wallet, and use that money to rent mining hashpower from other miners. Moreover, they could direct that power to any mining pool of their choosing.

On top of that, it would even become possible to crowdfund new mining pools in the future as well. Setting up a mining pool itself is not the most expensive part, but maintaining and optimizing it can become quite costly over time. A crowdfunding campaign to set up new mining pools would help distribute hashing power as well in the Bitcoin mining world.

Granted, it is not easy to start out as a new Bitcoin mining pool right now with next to no hashpower pointed towards it. This is where a two-pronged approach to funding the pool and funding rented hashpower can come into the picture, to get things rolling. After all, the miners have a lot of value in the Bitcoin world, and they hold the power to remove Bitcoin mining centralization completely.

Source: Reddit

Images credit 1,2

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  • Cyberdexter

    GetHashing coined the phrase “crowd mining” for exactly those reasons over a year ago. Unfortunately the project didn’t get the attention it deserved and you now see some of GH’s concept popping up tagged “first ever” and god knows what…