Micro Mining (Cryptocurrency): What It Means, How It Works

What Is Micro Mining? Micro mining is limited capacity cryptocurrency mining activity that can be performed by commonly used internet-connected 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, primarily due to the computational intensity of mining Bitcoin and a lack of IoT consumer adoption. KEY TAKEAWAYS Micro mining was a proposal for mobile devices and internet-connected things (IoT) to mine small amounts of cryptocurrency as a way of speeding up transactions and lowering device costs. The idea proved impractical because mining proof-of-work cryptos like Bitcoin became far more resource-intensive than an embedded computer system could handle and because the Internet of Things didn't meet growth expectations. Micro mining may still make a comeback as various alternative cryptocurrencies flourish and network developers look for solutions to congestion and slow transaction times. How Micro Mining Works Micro mining uses software on small internet-connected devices such as smartphones, e-readers, or other connected appliances to mine for cryptocurrencies with idle processing time. These personal and household appliances could then generate small amounts of revenue to help defray their purchase or operational costs. A hypothetical IoT blockchain network would allow micro mining supported by IoT-enabled appliances. Theoretically, it would eliminate the storage requirement of the transaction ledger and maintenance by outsourcing the device and storage and maintenance tasks to various trusted, pre-established nodes on the blockchain. In this scenario, the household device only validates the transaction and sends 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 storage, maintenance, and processing delegation to the trusted nodes would eliminate the need for the low-end device to have high computation power and memory. However, it would allow it to contribute significantly towards mining activity, leading to more scalability and theoretically increasing the number of transactions a network could handle. The Argument for IoT Micro Mining The computing- and energy-intensive mining process for cryptos that generates new 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 with (micro-) processors, (micro-) controllers, and memory modules. These devices can store, process, and exchange data with other systems and networks in real time. Micro mining was also believed to increase transaction processing and decrease high transaction costs through economies of scale. It was thought that hundreds of thousands of devices could be added to the network, which would help reduce these burdens and increase network efficiency. Future of IoT Micro Mining 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 and that you'd earn crypto by allowing them to be used seems quaint. Hardware Requirements are Growing What happened? 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 and appliances 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. No Demand for IoT 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 didn't want internet-connected toothbrushes or foot massagers 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." 1 This is no less true of industrial applications of IoT as it is for consumer applications. No Value Neither consumers nor industries saw any value in leasing the limited computational power of their devices because the value of mining cryptocurrency doesn't support the loss of capacity. In other words, mining would eat up the computational resources the devices need, making the device networking and processing systems worthless to the owner. What Are Some Examples of Internet of Things (IoT)-Enabled Home Devices? Examples of Internet of Things (IoT)-enabled or so-called "smart" home devices include speakers, thermostats, air purifiers, cameras, lights, locks, doorbells, refrigerators, microwaves, ovens, washing machines, and microwaves. How Much Can You Make Mining Bitcoin? It depends on your device(s). If you participate in a pool, you'll likely make a percentage of profits based on how much work you contributed and the reward-splitting system the pool uses—if your pool even wins (and many pools keep the transaction fees). A pool reward of 6.25 BTC at a market price of $27,405.30 would be $171,283.16 split between all the participating pool members based on their share of work. In a Pay Per N Shares (PPNS) system, if you contributed 0.5% of the shares, you'd receive $856.41. If thousands of miners are in the pool, your shares would likely be much smaller. Can I Mine Bitcoin on My Phone? It's not plausible to mine bitcoin on your phone, as it takes extensive computing power and electricity to see results. You are unlikely to see earnings from running a Bitcoin miner on a mobile device, even if you are part of a mining pool. The Bottom Line Micro mining is a limited-capacity crypto mining activity that can be undertaken by frequently-used and connected Internet of Things (IoT) appliances, such as smart refrigerators, washing machines, air conditioners, and others. The goal is to use the limited processing power available in these appliances to solve the scalability problem and assist in the mass adoption of cryptocurrency. However, the idea hasn't come to fruition due to how work-intensive Bitcoin mining is and the slow pace of consumer adoption of smart appliances. The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info. As of the date this article was written, the author does not own cryptocurrency. Compete Risk Free with $100,000 in Virtual Cash Put your trading skills to the test with our FREE Stock Simulator. Compete with thousands of Investopedia traders and trade your way to the top! Submit trades in a virtual environment before you start risking your own money. Practice trading strategies so that when you're ready to enter the real market, you've had the practice you need. Try our Stock Simulator today >>