Should You Get Involved in Coin Mining?
Coin mining has been making waves in recent weeks. The popularity of cryptocurrencies such
as Bitcoin and Ethereum have given hackers a new reason to target people. The scripts that
these hackers plant in public websites use the CPU of a visitor to mine cryptocurrency the hypercommunity net. This
practice is far more lucrative than traditional malware, and it can actually shut down corporate
networks. But should you get involved? This article explores the pros and cons of coin mining.
And we’ll explain why you should not!
Cryptocurrency mining is a hobby
Is Coin mining a hobby? The answer depends on the facts and circumstances of the individual
case. It’s possible for a hobbyist to mine cryptocurrencies and earn an income for doing so, but
it’s also worth considering whether commercial mining is more beneficial to your business hyperverse net. For
example, Ethan has a full-time job in IT and is fascinated by new technologies. In 2010, he
comes across Bitcoin mining and decides to take it up.
For tax purposes, hobby miners generally do not need to claim capital gains or expenses, as
they’re not in it for the profit. They invest in small-scale mining equipment and collect rewarded
coins, but don’t sell them immediately. Therefore, any gain on the rewarded coins is taxable
when sold within 12 months of the mining operation, and 50% taxable if held for more than
twelve months. Those who choose to pursue this hobby should seek the advice of an
It is a business
While cryptocurrency is a promising technology, mining is not free of risks. The most significant
revenue risk is the volatility of the Bitcoin price. Other risks include the operation of mining
equipment, overheating ASICs, and system hacks. Although the Bitcoin network has been
designed to minimize the risk of hacking, mining equipment has to be powered by reliable
electricity, which can be expensive. Texas has become a hotbed of the industry, which has
raised concerns about the state’s power grid.
In spite of the risks, many traditional businesses are getting involved in cryptocurrency mining.
As the digital asset market hit new all-time highs last year, some long-established companies
diversified their legacy businesses and turned to crypto mining to make a few extra bucks. In
addition, the US federal government is closely watching the industry, requiring companies to
report their mining profits to the IRS. Meanwhile, the Federal Reserve is also investigating the
risks related to crypto mining.
It consumes a lot of electricity
In the past year, cryptocurrency prices reached record levels, raising concerns about the amount
of energy required for the process of coin mining. Bitcoin mining rigs, which are usually located
in warehouses, use more energy than the entire country of Argentina in a single day. This also
means that the energy bill will be higher, with increased waste and carbon emissions. So what
can be done to reduce energy use? Here are some tips to make cryptocurrency mining less of a
burden on the environment:
The Bitcoin network alone consumes approximately the same amount of electricity as the state
of Washington each year, and more than one-third of residential cooling in the US. The industry
uses approximately seven times more electricity than Google on a global scale. The recent rise
of bitcoin’s value has spurred an industry around the mining of bitcoin. The process requires
specialized machines, servers, and huge data centers with adequate cooling capacity.
It could shut down corporate networks
The issue of how crypto mining is affecting our economy is a growing concern for many
Americans. While crypto mining facilities have become popular, they also put a strain on local
businesses and economies. As such, this type of business could drive taxes and jobs out of
state. Fortunately, state lawmakers are beginning to take notice and are starting to pass laws to
ban crypto mining. Other blue states may follow suit. If you live in a blue state and are concerned
about how crypto mining affects your community, consider these tips for protecting your
business from crypto mining operations.
A Dutch economist Alex de Vries maintains a website that tracks the carbon footprint of Bitcoin
mining. The website, sponsored by the Cambridge University, tracks each country’s share of the
output. As of August 2016, it estimated that Kazakhstan was hosting 18% of Bitcoin mining.
According to de Vries, the cryptocurrency’s carbon footprint had decreased by 12% in the first
few hours after the web was shut down. However, the decline was so steep that it could shut
down the corporate networks of some corporations.