Can technological improvements in mining hardware reduce costs?


With technological improvements in mining hardware (e.g., Application-Specific Integrated Circuits, General Processing Unit manufacturing), miners can mine coins faster and increase their hash rates. 

As miners increase their efforts and become more successful with less time and energy expenditure, their productivity also improves. Hence, they mint more coins into circulation compared to when they had less technologically advanced equipment. Let’s evaluate the impacts of technological improvements on mining hardware and how it affects the price of JAX coins.

Technological advances in mining hardware

In cryptocurrency mining, technological improvements are improvements in mining hardware that solve complex mathematical equations faster and give miners the solutions they need to validate and create new blocks. 

In the 2010s, American Professor Jonathan Koomey detailed in a research article that the energy efficiency of computer chips is doubling once per 2.6 years. Accordingly, they initially cost more and cause a price fall in the next few months regarding advanced mining equipment. In the long run, the prices do not impede the adoption of technology by other miners. So, the real issue is whether the benefits of using technologically advanced hardware will become problematic for Jax.Network?

Effects of technologically advanced mining hardware on JAX

The benefits of using technologically advanced mining hardware outweigh the initial costs. Miners can mine new tokens and put them into circulation at a faster rate. When the supply of tokens increases and reaches the circulation, it is expected that the cryptocurrency price decreases because there is less demand for it. 

A decrease in demand is less of a concern with cryptocurrencies like Bitcoin because they have a limited supply. However, for JAX, the native cryptocurrency of Jax.Network, which is scalable and not limited in supply, introducing an increasingly more significant number of tokens could decrease the price in less demand, triggering a currency crash in a negative feedback loop.

While there may be a slight decrease in the price of JAX, if a large number of tokens are minted and put into circulation, the price decrease will also depend on the added volume of coins compared to the number of coins already in circulation. The Jax.Network rewards are given in proportion to effort, and the rewards are JAX coins. Naturally, miners will only mine JAX coins if they can make profits from it. 

Jax.Network can control inflation with JAX since the miners can only increase their mining power when there is more demand for the coin. Besides, there is a significant opportunity cost of mining JAX since miners have to forgo their BTC block reward to print JAX, making it very expensive to mine, especially if the price is going down. Miners will have to decrease their mining power on the network when demand is low to control inflation on JAX while also keeping the coin stable. 

Another point to note is that Jax.Network has introduced a K-coefficient that miners can vote on in order to prevent the cost of mining from going down too quickly. The coefficient will be adjusted by miners. If they do not follow the optimal value for K and wish to print more, they will put the value of the entire network at risk, since users would have an incentive to swap their JAX coins for other coins, thus indicating to miners that they have printed too many coins. 


Technological improvements in mining hardware and increased hash rates can enlarge the number and rate of JAX coins minted. In theory, as miners make more and more money from mining JAX, other miners will begin to mine JAX, and the surge in supply will decrease the price when there is a low demand for it.  

Also, there must still be a consensus before adding blocks to the blockchain. Hence, the chances of a 51% attack are significantly reduced since it is less likely that anyone can mint enough JAX coins to decrease its price or cause it to crash.

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Written by Guest User