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Why Bitcoin is Facing Mining Difficulties (Why Bitcoin is Dangerous)

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Why does Bitcoin face mining difficulties? Why does Bitcoin face mining difficu

Why Bitcoin is Facing Mining Difficulties (Why Bitcoin is Dangerous)

Why does Bitcoin face mining difficulties? Why does Bitcoin face mining difficulties?

Today is the last day of 2019, but there are many problems due to the difficulty of mining, such as uneven quality of chip manufacturers, interruptions in power supply, etc.

These problems mainly arise because miners cannot use electrical equipment normally to mine Bitcoin, which causes price fluctuations. Due to the increase in computing power and rising costs, the number of mining pools in the Bitcoin network continues to grow, and transaction fees are gradually becoming expensive. Therefore, many users have begun to pay attention to the mining difficulty indicator of Bitcoin and speculate that the development of the mining industry may be related to the price trend of Bitcoin.

So, what causes such phenomena? The mining difficulty of Bitcoin has been continuously increasing, and with more and more institutional investors entering the market to purchase and invest in Bitcoin, as well as the increase in cryptocurrency trading activities and so on. But in fact, Bitcoin has already encountered many problems. First, miners lack sufficient hardware resources to provide power for themselves; second, the sharp drop in the price of Bitcoin has a significant impact on mining farms. Some companies need a large amount of manpower and resources to reduce operational efficiency, which makes the maintenance of mining machines cumbersome. Finally, the slow speed of mining farms and long maintenance time are also issues.

Let’s take a look at several recent mining-related events:

1. One of the largest cryptocurrency exchanges in the United States, Coinbase, temporarily suspends customer deposit and withdrawal services;

2. After the largest digital currency payment platform in Canada, Bitpay, announced the suspension of services, Bitcoin fell by about 20%;

3. The top game publisher in South Korea, AnimocaBrands, announced the suspension of services and the closure of some servers to support its subsidiary, AnimocaBrands.

According to statistics, there have been 17 similar cases worldwide in the first half of 2017. There were a total of 4 such cases in the whole year of 2017. In the third quarter of 2018, there were 5 cases, with multiple degrees of decline occurring in different months in early 2018 and mid-2020. The most serious case was the collapse of the Bitcoin chain caused by a hacker attack at the end of 2017, resulting in an average loss of 30 million US dollars to the entire network. In addition, since 2019, there have been multiple targeted network security incidents worldwide, resulting in the entire industry shutting down or being forced to close.

In my opinion, there are fundamental reasons for these incidents. On the one hand, there is no need to change the existing technical architecture for technological progress. On the other hand, the application of blockchain technology has not been widely recognized. Technically, the mainstream consensus mechanisms are all built on a relatively fair foundation, ensuring that data will not be leaked to third parties or other individuals or organizations through open and transparent processes. On the other hand, if it is unlikely that a project can solve all problems, it will eventually move towards the mature stage.

Why Bitcoin is Dangerous

The reason why Bitcoin is dangerous is that it has a certain level of anonymity and can be stolen without third-party authorization.

Why is Bitcoin safe? Bitcoin is the most important technological breakthrough in blockchain; its birth and application have made it a global digital currency. But if we consider it as a “speculative” tool, it means that it is dangerous: once someone controls a large amount of BTC and transfers it to this network, they can conduct transactions (such as buying Bitcoin with electronic cash).

For Bitcoin, it is one of the valuable and fragile assets because it is not as decentralized and immutable as gold. Moreover, due to its wide range of uses, it cannot transfer or verify information, which causes hacker attacks and other reasons, making Bitcoin prices easily affected.

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