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Smart readers of the article from yesterday, The eight most popular types of cryptocurrency transactions do not match your expectations, may have noticed an important omission: any discussion on crypto-currency transaction processing (crypto), what crypto cognoscenti calls mining.
Do not be afraid: it is the second article of a two-part article. In this part, I discuss some of the most popular crypto mining business models, that is, ways to make money.
Crypto like Bitcoin are intentionally set up with a decentralized auto mechanism that creates the Bitcoin in a superficial way to offer rewards to minors for processing transactions. The result: a booming activity in the mining sector.
Anyone with a large number of high-speed computers and access to electricity anywhere in the world can essentially print money simply by running free software.
Six Common Mining Models of CryptocurrencyJason Bloomberg
Business Model Crypto Mining # 1: Legal and Competitive Mining
In the early days of cryptography, mining was a boon to small entrepreneurs – but mining activity became increasingly competitive as miners bought extremely powerful computers while developing their businesses to remain profitable.
The risks seemed low, since the original Bitcoin software was supposed to take into account the drop in prices, which facilitated the exploitation of the number of minors remaining in the game, thus ensuring that there would always be enough minors to process all transactions.
Then, the Bitcoin crash happened, severely limiting the possibility for miners to produce cryptographic data while making profits. It turned out that the inefficiencies of the mining algorithm, combined with market pressure on transaction costs that were intended to partially compensate miners, limited the ability of anyone to operate profitably.
Legal cryptographic mining using electricity at market rates is becoming increasingly unachievable, even in places like Iceland, where electricity rates are exceptionally low, combined with favorable temperatures for data centers filled with computers generating heat.
What are the remaining economic models? Let's take a closer look.
Business Model Crypto Mining # 2: Subsidized Electricity Mining
In the state of Washington, hydropower generates much more juice than the local population can consume, attracting a booming activity in the field of crypto-extraction. "The five huge hydroelectric dams in the region, all of which are in public service districts, generate nearly six times more energy than local residents and businesses can use" Explain politico the journalist Paul Roberts. "Most of the surplus is exported, at high prices, to markets like Seattle or Los Angeles, allowing utilities to sell electricity locally at a price well below its cost. of production."
In 2015, however, the craze for the Washington mining sector with Bitcoins was over. "Margins have become so thin – and sometimes even negative – that miners have to spend their coins as soon as they use them to pay their electricity bills," says Roberts.
If it's not Washington, what about Iran? "I meet some very interesting cases" Remarks Mohsen Rajabi, an Iranian blockchain entrepreneur. "I've recently set up a platform for a middle-aged client who did not know the technology at all and who had simply heard about the mining and its potential profits. He wanted to start with ten devices installed in his factory because it can legally use extremely cheap industrial electricity. "
Business Model Crypto Mining # 3: Stealing electricity
Reducing electricity costs completely is an obvious way to improve the profitability of crypto-extraction. At the beginning of Bitcoin, students stuck their platforms to dormitories, stealing some juice from their mother.
Today, on the contrary, stealing electricity is a serious matter. "A Shanxi Datong [China] A man named Xu Xinghua stole power at the poles near the second Kouquan railway plant, borrowed from November to December 2017, reports Liu Yulin, writing in Chinese for The paper (translation by
Google
"The coin extraction machine and three electric fans ran for 24 hours," she continues. "Xu Xinghua extracted a total of 3.2 bitcoins, yielding 120,000 yuan [$17,700], and the electricity generated by the stolen electricity was 104,000 [$15,340] yuan."
What happened to the thief? "Xu Xinghua sentenced to three years and six months in prison for theft and fined 100,000 yuan [$14,750], "She reports.He also had to pay back to the electricity company the stolen electricity and give up his equipment.
This story is one of many, especially because the author was arrested and the story was published in the local newspaper. Many other instances are sure to be there, not yet reported.
Another popular, potentially unintentional way to steal electricity is to create a mining operation, make a profit, and then stop doing business.
Here is the story of one of the mining companies in the state of Washington. "The American mining company Bitcoin based in Giga Watt declared bankruptcy, millions still being due to creditors", written Yogita Khatri for Coindesk. "Creditors include utility provider in his Douglas County [Washington] base, having a claim of more than $ 310,000, and the electricity supplier, Neppel Electric, which owes about half a million dollars. "
On the bright side, these hard-working utilities may be getting some of their money back, as Giga Watt has collected about $ 22 million in its ICO – and it's possible that the scammers will not be able to spend to secretly keep all the products before the bankruptcy closed them.
Business Model Crypto Mining # 4: Cryptojacking
Illicit cryptography, commonly known as cryptojacking, has surpbaded ransomware as the most popular form of cybercrime targeting businesses. Cryptojacking involves introducing an encryption extraction software on the computer of the target victim without his knowledge, thus generating cryptography for the hacker while stealing processor cycles and electricity from the victim.
In fact, the problem of cryptojacking is much worse than it was when I wrote my article Cybertrose in 2018: illegal cryptography in March 2018 – as I had warned. "Despite the volatility of the value of various cryptocurrencies, the trend of illegal cryptocurrency extraction activities among cybercriminals shows no signs of slowing down," according to David Liebenberg, Senior Threat Analyst at Cisco Talos.
One of the reasons why the cryptojacking problem worsens is that the malware has been improved. One of these packages: Rocke. "Talos believes with great confidence that Rocke will continue to exploit Git repositories to download and exploit illegal logging activities on victim machines," continues Liebenberg.
Git repositories are where most of today's enterprise software developers store and manage their source code – but these repositories are not the only target of Rocke's creators. "It's worth noting that they're developing their set of tools to include browser-based miners, hard-to-detect Trojans, and the Cobalt Strike malware." [malware that leverages Cobalt Strike penetration testing software]. "
Business Model Crypto Mining # 5: elimination of sanctions
Penalty evasion was one of the types of encrypted transactions I talked about in yesterday's article, but it's also a primary business model.
For this story, I turn first to two Iranian Bitcoin miners. "By the time we bought the extraction device, the US dollar rate in Iran was still quite high, so we thought we would earn about $ 90 to $ 100 a month," he said. Explain Ali Hosseini, an Iranian miner. "The cost of electricity is relatively low in Iran, so the calculation seemed viable."
Hosseini's cousin also spoke. "Exchange rates and prices in Bitcoin have fallen and our profits have been reduced, but we still do not see any losses," said Pedram Ghasemi, another Iranian miner. "According to my calculations, the US dollar must be less than 110,000 rials [about $2.60] and Bitcoin should be reduced to $ 2,000 for us to really lose.
I can not talk about Iran without also talking about North Korea. Priscilla Moriuchi, former head of the National Security Agency and now Head of Strategic Threat Development at Recorded Future, estimates that North Korea could have earned up to $ 200 million in 2017 through mining cryptography.
How, then, would North Korea turn this crypto into a strong currency? "North Korea has such extensive criminal networks that have been well established for decades to facilitate illegal activities," Moriuchi said. said. "If Pyongyang were able to withdraw money in a physical currency, it would be relatively easy for them to transfer it to North Korea and buy things with this physical currency. I would bet these coins are transformed into something – currency or material goods – that support North Korea's nuclear and ballistic missile program. "
Business Model Crypto Mining # 6: Mining at a loss
The latest business model on my list goes against the common sense: operating at a loss. Of course, this is not really a rational business model – your main motivation is to ensure that cryptographic transactions can be completed.
In yesterday's article, I explained how cryptography is essential to Darknet's operation. Mbadive organized crime syndicates therefore depend on the successful exchange of crypto to move their contraband.
If the value of Bitcoin or any other crypto were to fall to the point that no one could make money, then such unions would probably intervene to fill the void at a loss to keep the crypto going on. execution.
Therefore, there is a reason not to take to heart for all the fanatics of cryptography, there is no chance that the values of cryptography fall enough for mining to stop. Organized crime would not let that happen.
Intellyx publishes the bi-monthly bulletin Cortex, advises companies on their digital transformation initiatives and helps suppliers communicate their agility stories. At the time of writing this article, none of the organizations mentioned in this article are Intellyx customers. The author does not own and do not intend to possess cryptocurrency or other cryptotoken, neither long nor short. Image credit: Jason Bloomberg.
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Smart readers of the article from yesterday, The eight most popular types of cryptocurrency transactions do not match your expectations, may have noticed an important omission: any discussion on crypto-currency transaction processing (crypto), what crypto cognoscenti calls mining.
Do not be afraid: it is the second article of a two-part article. In this part, I discuss some of the most popular crypto mining business models, that is, ways to make money.
Crypto like Bitcoin are intentionally set up with a decentralized auto mechanism that creates the Bitcoin in a superficial way to offer rewards to minors for processing transactions. The result: a booming activity in the mining sector.
Anyone with a large number of high-speed computers and access to electricity anywhere in the world can essentially print money simply by running free software.
Six Common Mining Models of CryptocurrencyJason Bloomberg
Business Model Crypto Mining # 1: Legal and Competitive Mining
In the early days of cryptography, mining was a boon to small entrepreneurs – but mining activity became increasingly competitive as miners bought extremely powerful computers while developing their businesses to remain profitable.
The risks seemed low, since the original Bitcoin software was supposed to take into account the drop in prices, which facilitated the exploitation of the number of minors remaining in the game, thus ensuring that there would always be enough minors to process all transactions.
Then, the Bitcoin crash happened, severely limiting the possibility for miners to produce cryptographic data while making profits. It turned out that the inefficiencies of the mining algorithm, combined with market pressure on transaction costs that were intended to partially compensate miners, limited the ability of anyone to operate profitably.
Legal cryptographic mining using electricity at market rates is becoming increasingly unachievable, even in places like Iceland, where electricity rates are exceptionally low, combined with favorable temperatures for data centers filled with computers generating heat.
What are the remaining economic models? Let's take a closer look.
Business Model Crypto Mining # 2: Subsidized Electricity Mining
In the state of Washington, hydropower generates much more juice than the local population can consume, attracting a booming activity in the field of crypto-extraction. "The five huge hydroelectric dams in the region, all of which are in public service districts, generate nearly six times more energy than local residents and businesses can use," he says. politico the journalist Paul Roberts. "Most of the surplus is exported, at high prices, to markets like Seattle or Los Angeles, allowing utilities to sell electricity locally at a price well below its cost. of production."
In 2015, however, the craze for the Washington mining sector with Bitcoins was over. "Margins have become so thin – and sometimes even negative – that miners have to spend their coins as soon as they use them to pay their electricity bills," says Roberts.
If it's not Washington, what about Iran? "I have some very interesting cases," says Mohsen Rajabi, an Iranian blockchain entrepreneur. "I've recently set up a platform for a middle-aged client who did not know the technology at all and who had simply heard about the mining and its potential profits. He wanted to start with ten devices installed in his factory because it can legally use extremely cheap industrial electricity. "
Business Model Crypto Mining # 3: Stealing electricity
Reducing electricity costs completely is an obvious way to improve the profitability of crypto-extraction. At the beginning of Bitcoin, students stuck their platforms to dormitories, stealing some juice from their mother.
Today, on the contrary, stealing electricity is a serious matter. "A Shanxi Datong [China] A man by the name of Xu Xinghua stole electricity at the poles near the second Kouquan Railway factory, which was borrowed from November to December 2017, "reports Liu Yulin, writing in Chinese for The paper (translation by
Google
"The coin extraction machine and three electric fans ran for 24 hours," she continues. "Xu Xinghua extracted a total of 3.2 bitcoins, yielding 120,000 yuan [$17,700], and the electricity generated by the stolen electricity was 104,000 [$15,340] yuan."
What happened to the thief? "Xu Xinghua sentenced to three years and six months in prison for theft and fined 100,000 yuan [$14,750], "She reports.He also had to pay back to the electricity company the stolen electricity and give up his equipment.
This story is one of many, especially because the author was arrested and the story was published in the local newspaper. Many other instances are sure to be there, not yet reported.
Another popular, potentially unintentional way to steal electricity is to create a mining operation, make a profit, and then stop doing business.
Here is the story of one of the mining companies in the state of Washington. "The American mining company Bitcoin based in Giga Watt has declared bankruptcy, millions still being due to creditors," writes Yogita Khatri for Coindesk. "Creditors include utility provider in his Douglas County [Washington] base, having a claim of more than $ 310,000, and the electricity supplier, Neppel Electric, which owes about half a million dollars. "
On the bright side, it may be that these hardened utilities are getting some of their money back, as Giga Watt has collected about $ 22 million in its ICO. the bankruptcy closed them.
Business Model Crypto Mining # 4: Cryptojacking
Illicit encryption, commonly known as cryptojacking, has surpbaded ransomware as the most popular form of cybercrime targeting businesses. Cryptojacking involves introducing an encryption extraction software on the computer of the target victim without his knowledge, thus generating cryptography for the hacker while stealing processor cycles and electricity from the victim.
In fact, the problem of cryptojacking is much worse than it was when I wrote my article Cybertrose in 2018: illegal cryptography in March 2018 – as I had warned. "Despite the volatility of the value of various cryptocurrencies, the trend of cybercriminals illegally exploiting cryptocurrency extraction shows no signs of slowing down," said David Liebenberg, Senior Threat Analyst at Cisco Talos.
One of the reasons why the cryptojacking problem worsens is that the malware has been improved. One of these packages: Rocke. "Talos believes with great confidence that Rocke will continue to exploit Git repositories to download and exploit illegal mining activities on victim machines," continues Liebenberg.
Git repositories are where most of today's enterprise software developers store and manage their source code – but these repositories are not the only target of Rocke's creators. "It's worth noting that they're developing their set of tools to include browser-based miners, hard-to-detect Trojans, and the Cobalt Strike malware." [malware that leverages Cobalt Strike penetration testing software]. "
Business Model Crypto Mining # 5: elimination of sanctions
Penalty evasion was one of the types of encrypted transactions I talked about in yesterday's article, but it's also a primary business model.
For this story, I turn first to two Iranian Bitcoin miners. "By the time we bought the mining equipment, the US dollar rate in Iran was still quite high, so we thought we would earn about $ 90 to $ 100 a month," says Ali Hosseini, an Iranian miner. "The cost of electricity is relatively low in Iran, so the calculation seemed viable."
Hosseini's cousin also spoke. "Exchange rates and prices in Bitcoin have fallen and our profits have been reduced, but we still do not see any losses," said Pedram Ghasemi, another Iranian miner. "According to my calculations, the US dollar must be less than 110,000 rials [about $2.60] and Bitcoin should be reduced to $ 2,000 for us to really lose.
I can not talk about Iran without also talking about North Korea. Priscilla Moriuchi, former head of the National Security Agency and now Head of Strategic Threat Development at Recorded Future, estimates that North Korea could have earned up to $ 200 million in 2017 through mining cryptography.
How, then, would North Korea turn this crypto into a hard currency? "North Korea has such extensive criminal networks that have been well established for decades to facilitate illegal activities," Moriuchi said. "If Pyongyang were able to withdraw money in a physical currency, it would be relatively easy for them to transfer it to North Korea and buy things with this physical currency. I would bet these coins are transformed into something – currency or material goods – that support North Korea's nuclear and ballistic missile program. "
Business Model Crypto Mining # 6: Mining at a loss
The latest business model on my list goes against the common sense: operating at a loss. Of course, this is not really a rational business model – your main motivation is to ensure that cryptographic transactions can be completed.
In yesterday's article, I explained how cryptography is essential to Darknet's operation. Mbadive organized crime syndicates therefore depend on the successful exchange of crypto to move their contraband.
If the value of Bitcoin or any other crypto were to fall to the point that no one could make money, then such unions would probably intervene to fill the void at a loss to keep the crypto going on. execution.
Therefore, there is a reason not to take to heart for all the fanatics of cryptography, there is no chance that the values of cryptography fall enough for mining to stop. Organized crime would not let that happen.
Intellyx publishes the bi-monthly bulletin Cortex, advises companies on their digital transformation initiatives and helps suppliers communicate their agility stories. At the time of writing this article, none of the organizations mentioned in this article are Intellyx customers. The author does not own and do not intend to possess cryptocurrency or other cryptotoken, neither long nor short. Image credit: Jason Bloomberg.
