Micro Mining (Cryptocurrency)

What Is Micro Mining?

Micro mining refers to the limited capacity mining activity that can be performed by commonly used Internet of Things (IoT)-enabled home appliances or mobile and hand-held electronic devices.

Micro mining was an idea promoted to solve the scalability problem and mass adoption of cryptocurrency by using the limited processing power and memory available in various home appliances — like smart refrigerators, washing machines, air conditioners, and even vacuum cleaners. The idea has not yet succeeded, mostly due to the labor intensity of mining Bitcoin and a lack of IoT consumer adoption.

How Micro Mining Works

Micro mining essentially allows small devices that are connected to the internet, such as smartphones, e-readers, IoT-connected appliances, etc. to mine for cryptocurrencies with their idle processing time. These personal and household appliances could then generate small amounts of revenue to help defray their purchase costs or costs of operation.

Another motivation for micro mining stemmed from delays in transaction processing and high transaction costs were identified as the two biggest hurdles to mass adoption of cryptocurrency networks, particularly Bitcoin, during the run-up to the crypto bubble of 2017–2018. Some crypto enthusiasts proposed using connected devices to disperse the computing power necessary to mine cryptos, thereby speeding up the process and making it more efficient.

The Argument for IoT Micro Mining

The computing- and energy-intensive mining process for cryptos that generates news coins and validates transactions led many crypto enthusiasts to seek a solution outside of expensive and capital-intensive mining operations. Using the Internet of Things (IoT) to relieve this burden was one proposed solution.

IoT is the ecosystem of Internet-connected smart devices, appliances, and accessories that are fitted with (micro-) processors, (micro-) controllers, and memory modules. These devices are capable of storing, processing, and exchanging data with other systems and networks in real time — capabilities that were thought to be harnessable for mining activity.

For instance, a hypothetical IOTW blockchain network would allow micro mining supported by IoT-enabled white goods. Theoretically, it would eliminate the storage requirement of the transaction ledger and its maintenance by the device, and “outsource” this ledger storage and maintenance task to various trusted, pre-established nodes on the IOTW blockchain.

In this scenario, the household device only performs the limited activity of validating the transaction and sending the necessary details to the trusted node. The network nodes would collect these validated transactions from various devices, and store them in the network ledger based on necessary authentication and consensus.

Such delegation of storage, maintenance, and processing to the trusted nodes would eliminate the need for the low-end device to have high computation power and memory but allow it to contribute significantly towards the mining activity leading to more scalability and rapid execution of transactions.

Don't Expect IoT Micro Mining Any Time Soon

The utopian version of this argument, which gained force in popular culture around 2011, was built on the idea that internet-enabled devices would explode in popularity and adoption by the end of the decade. Today, the idea that every electronic device in your house would talk to every other device seems quaint, and the idea that device owners would benefit by earning cryptocoins for their contribution towards mining is not close to becoming a reality.

What happened? In the first place, the standard mining operation of popular cryptocurrency networks like Bitcoin and Ethereum needed high-end hardware even in 2013. The limited resources available in the computers of consumer goods are no match for those requirements, which only became more burdensome as more dedicated players entered the mining space. Moreover, Bitcoin halving means the capital requirements for mining Bitcoin are becoming exponentially more difficult, not less.

In the second place, the optimism of IoT boosters was far off the reality mark. Since the delivery of the first consumer-focused IoT devices to market, technology makers have realized many consumers don't want internet-connected toothbrushes and garage door openers because they don't add value to the function of those objects.

Moreover, as one industry analyst put it, "the development process for IoT laid bare the inherent friction between the ‘internet’ and the ‘things’ worlds. The internet (or software) world is characterised by much greater tolerance of faults, less robust testing, and faster iteration and time to market. The hardware industry, in contrast, comes from a heritage of organisations that are much more risk averse, understandably so because when hardware fails people die." This is no less true of industrial applications of IoT as it is for consumer applications.

Finally, neither consumers nor industries saw any value in leasing the computational power of their devices (what there was because there wasn't much to begin with) because the value of mining cryptocurrency doesn't support the loss of capacity. Ultimately, micro mining using IoT is to date a science fiction dream rather than a practical reality.