Recent information has come to light that Nvidia aims to reduce its GPUs capability of cryptocurrency mining. Why are GPUs generally favoured in cryptocurrency mining, why is Nvidia affecting their GPUs to prevent mining effectiveness, and what implications does cryptocurrency mining have?
What is cryptocurrency, and how is it beneficial?
Cryptocurrencies such as Bitcoin and Dogecoin are often making headlines when their value skyrockets to new highs. Some of these stories even mention unfortunate individuals who have lost their hard drives that store their cryptocurrency, which would be worth millions. But many are still unsure of what cryptocurrency really is and how it can be highly beneficial in the world of finance.
Simply put, cryptocurrency is a ledger system that tracks how many digital coins a digital wallet has. Each wallet has a unique address in which other wallets can send digital coins to, but each wallet has a personal private key that is needed to move digital coins out of a wallet.
The ledger that holds all the current wallet contents is entirely public and available for all to see. However, the private keys are kept private to each wallet owner. Furthermore, every transaction between wallets is stored in the public ledger, and this means that every transaction is verified in a chain of transactions, which is called a blockchain.
To date, cryptocurrency systems are the only financial systems that have no recorded fraudulent transactions to date. There are no bounced payments, wallets cannot be cracked, and transactions cannot be stopped halfway and diverted into someone else’s account.
The ability to send digital coins from one wallet to another wallet creates a cross-border and open currency. Except for minimal transaction fees charged by miners (who both create new digital coins and verify transactions), users can essentially transfer money from different currencies without facing currency conversion rates.
The use of cryptocurrency also extends into smart contracts which are automated electronic contracts that ensure contracts are followed, with work being done in exchange for a resource (such as a digital coin). Furthermore, cryptocurrency could become pivotal in IoT devices of the future whereby processing can be outsourced to idle IoT devices that work in exchange for digital currency.
Of course, there are some issues with cryptocurrency such as the anonymity of wallet addresses meaning that criminals often use cryptocurrency for purchasing illicit items. Cryptocurrency is also the choice for cybercriminals who wish to be paid for ransomware without being caught.
What is mining, and why are GPUs favoured?
Most cryptocurrency (except for a few like Dogecoin), have a finite supply of digital coins. These coins are divisible (i.e. a user can have 0.000001 of a digital coin), but only so many can exist, and it is this that gives them value.
However, when a cryptocurrency is released, no one owns any coins, so who gets the coins? While the subject is extremely complex, in essence, digital coins can only be added to the ledge (i.e. created) by being found. These digital coins can only be found if an extremely complex math problem can be solved, and each block in the chain only holds a small number of digital coins.
Simply put, digital coins have to be mined like (gold) where computers need to look at the current ledger, process huge amounts of data, and try to find a solution to a complex math problem that fits the current ledger which would mean that the next block in the chain makes mathematical sense (in relation to the previous block in the chain).
GPUs are the most commonly used piece of hardware for creating mining systems and the reason for this comes down to how GPUs differ from CPUs. Performing a single attempt at solving the math problem in the blockchain system is simple, but guessing the right answer can take…