Is it Worth it to Mine Dash?

Miners are always looking for ways to remain profitable in the cryptocurrency market. One way to do so is to expand outward from Bitcoin to finding other cryptocurrencies in which mining is profitable.

What is Dash?

Dash is a form of digital currency similar to Bitcoin, Litecoin, and other industry competitors. Unlike its competitors, Dash utilizes advanced technology to allow for instant and private transactions, making it more secure and trustworthy than other cryptocurrencies. Dash doesn’t just make transactions anonymous, but fully private, allowing users to transact without their transactions able to be traced.

Under the Hood

The Dash cryptocurrency runs on the Dash blockchain which utilizes a proof-of-work (PoW) consensus mechanism and using the X11 hashing function. It also utilizes masternodes to ensure full network decentralization. Masternodes use a formal voting system to agree on changes to the Dash blockchain network and help keep the network secure.

It uses Decentralized Governance by Blockchain (DGBB) to not only maintain its governance structure, but to maintain adequate funding to move the project forward. The Dash ecosystem is operated by the Dash decentralized autonomous organization (DAO). Funding for the project comes directly from the company, where 45% of block rewards going to miners, 45% to masternodes, and 10% into the DAO’s treasury.

ASIC Mining

As computer hardware has progressed, ASIC miners have become ubiquitous for mining the Dash blockchain. This is because the X11 hashing algorithm used by Dash is not ASIC-resistant, and therefore, ASICs have been designed specifically to mine Dash more efficiently than GPU or CPU hardware. In fact, Dash itself recommends only the use of ASIC equipment in mining.

In order to mine DASH you will need to purchase ASIC mining equipment specifically built to mine the Dash blockchain, which could add to the initial startup costs for those who don’t already own the proper equipment. ASIC mining equipment is specifically designed to mine only one blockchain, which in-turn, makes it inoperable for mining another chain.

Dash Mining Becomes Easier

The 2018 crypto bear market has caused a significant exodus from mining on most major PoW blockchains. This trend has been experienced exponentially in Dash, as both mining difficulty and hash rate have dropped substantially.

Blockchain difficulty measures how difficult it is for a miner to find a new block, with the higher the difficulty the less chance of successfully mining a new block. Dash mining difficulty has been cut almost in half just in the last month. This makes it easier for miners to successfully find new blocks and and obtain profits which were much harder to find at the beginning of the year.

Another key figure to determining mining profitability is hashrate, which measures the amount of power currently being used to mine a blockchain network. As more computers are used in mining the hash rate rises. However, similarly to its difficulty, the Dash hashrate has been significantly cut over the past month, making it clear less and less power is being allocated to mining the Dash blockchain. With less miners actively working to mine blocks on the Dash blockchain comes more opportunity for those miners who have stuck around.

Pros and Cons of Lower Transaction Fees

One statistic which has both pros and cons is that of lower transaction fees on the Dash blockchain. Low fees display a viability of the network to process transactions without high fees, one of the things blockchain solutions are attempting to solve. This makes Dash available to a wider range of users across the globe. However, lower fees also mean lower rewards for miners. The average transaction fee of less than $0.05 per transactions creates less of an incentive for miners to complete the work it takes to secure the network. This incentive structure could be offset by the rise in value of Dash tokens, which would give miners more of a reason to maintain the network.

Will Dash Matter?

It may be clear that successfully mining Dash has become easier over the last month, yet, if the Dash cryptocurrency isn’t widely adopted, obtaining the Dash cryptocurrency won’t be of much use.

The privacy coin market is saturated with many competitors. Dash is currently competing in the this market with other privacy coins such as ZCash, Monero, PIVX, and others. Additionally, traditional digital cash cryptocurrencies such as Bitcoin, Litecoin, and Bitcoin Cash can also be viewed as competitors to Dash in making global payments. This is a wide variety of competitors to get in the way of Dash becoming a major digital currency.

For this reason, Dash is working to create more value than these other cryptocurrencies by making it easier to transact. The cryptocurrency has partnered with Spectrocoin to support Dash on the company’s VISA debit card. It is also working with a host of different online merchants who now accept Dash as a form of payment.

Making a Bet on the Future

For now, Dash is viewed as a tertiary cryptocurrency which has value in its privacy usage, but has yet to achieve the notoriety of some of its competitors. Mining the cryptocurrency has just gotten significantly easier as its hashrate and difficulty has dropped, making now the perfect time to mine Dash as long as you purchase the proper ASIC hardware to do so. However, you must first determine if you believe Dash is a cryptocurrency which will hold its value moving into the future digital economy before mining its blockchain.

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