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Part of the game for cryptocurrencies is that they democratize money production. Instead of a centralized authority responsible for producing physical currency, anyone with a computer and an Internet connection can take part in the process. At least in theory.
The current reality of cryptocurrency is far from that ideal. At the time of writing, the power of the millions of computers on the bitcoin network is similar to that which Denmark consumes every year. The scale and power of mining operations financially make the unsustainable cryptocurrency for many everyday users, not to mention the technical knowledge and skills needed to get involved.
But a new company is trying to turn that dynamic upside down. Coinmine, a startup based in Los Angeles, California, is designing a device that says it will lead to the extraction of cryptocurrency within the reach of average users. Specifically, the company claims that its $ 799 device will provide "a new level of accessibility in an otherwise confusing business and make encryption easy for everyone."
To achieve this plug-and-play accessibility, Coinmine is designing a physical device and a telephone application. The physical device, which must be connected to an electrical outlet and to the local WiFi connection, performs actual mining while the app allows users to switch between different cryptocurrencies and extraction based on price movements. The operating system of the MineOS device will power mining. In its first version, Coinmine will support mining for Ethereum, Monero, Zcash and Ethereum Classic. It will also work with the Lightning network of bitcoins, allowing users to earn commissions from routing transactions on the cryptocurrency blockchain. Coinmine will take a five percent cut from each mining transaction. The startup has already raised $ 2 million from major investors, including Coinbase Ventures and Arrington Capital.
Will the coinmine be profitable for users?
Given the collapse of cryptocurrency prices this year, it could be a valid question to ask about Coinmine. Online publication Futurism linked average electricity rates in the United States and current cryptocurrency prices in an online calculator and found that at current rates, users would derive negligible profits from the use of the device. Minereum mining will bring a profit of $ 1.37 a month while Monero's mining will result in a profit of $ 0.70 a month. Users who perform Ethereum Classic mining will operate losses.
In response to the article published in Futurism, Coinmine's CEO, Farbood Nivi, said the device has future plans to support cryptocurrencies immediately after their launch and before they are listed on the cryptocurrency trade. This means that users can perform due diligence on a promising cryptocurrency and start extracting it before it is quoted on a stock exchange (and its price goes up) to make profits.
A number of other questions remain unanswered. Some states like Washington are already considering new tariff structures for the extraction of cryptocurrencies and this will probably further influence the mining profitability. It is also the most important issue of supporting cryptocurrency mining that already have centralized mining operations. The individual miners who become actors in the markets are at the mercy of the large mining conglomerates that control the availability of cryptocurrency in the market. It remains to be seen whether this can be a sustainable and profitable proposal for individual long-term miners.
Investing in cryptocurrencies and other initial coin offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation of Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since the situation of each individual is unique, a qualified professional should always be consulted before making any financial decision. Investopedia does not make any representations or warranties regarding the accuracy or timeliness of the information contained in this document. On the date this article was written, the author has 0.21 bitcoins and 1 Litecoin.
