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How Jax.Network creates a new sustainable business model for miners

by Maryna Trifonova, Head of Content at Jax.Network

Cryptocurrency mining is one of the most lucrative fintech activities right now, taking into account the recent bull market. However, it seems that it has come to an end, and miners will obviously lose a lot of potential profit or even struggle to break even. With Jax.Network, you have nothing to worry about, as we offer a win-win solution.

Competitive mining and associated risks

There are six common crypto mining business models, including competitive mining, mining at a loss, mining with subsidized electricity, mining with stolen electricity, cryptojacking, and evading sanctions. As you may notice, not all of them are legal, meaning the risks of such business models are very high. But let’s focus on competitive mining, which is totally legal and used by most miners. This model implies that miners buy powerful hardware and compete with others in order to get the reward, for example, Bitcoin. It also requires people to scale up their operations in order to stay profitable in the long run.

Even though the mining software was designed in a way that takes into account price changes, it was a really tough time for miners during market crashes. Let’s take Bitcoin as an example. The average mining cost of 1 Bitcoin is approximately $4,161, not to mention the equipment cost and depreciation. The price of the mining hardware may go as high as thousands of dollars. And just remember last year’s BTC drop below $4,000 to around $3,800 per coin. That was a period of total frustration on the market. Many traders faced liquidations, while miners were forced to work at a loss or just stop the operation.

Could have miners escape that scenario then? Most likely no, as all the altcoins in one way or another depend on Bitcoin price movement. Can miners eliminate the risk of getting into the same situation in the future? Absolutely!

Perks of Jax.Network for miners

Jax.Network utilizes a PoW consensus strengthened with sharding and merged mining. We also added Bitcoin as the anchor shard recently. So after years of research, we came to the conclusion that such a combination was the most efficient. It allows us to provide a secure, decentralized, and scalable blockchain for day-to-day payments while bringing exactly the same qualities to the Bitcoin system. When it’s totally clear how sharding addresses the issue, some may find the necessity of merged mining a bit confusing. Well, one of the key reasons for implementing this technology is to secure shards from take-over attacks.

Our shards have a unique reward function, which is proportional to the hashrate of the network. This allows us to peg the shard coins to the cost of one unit of computing power. At the protocol level, we incentivize miners to print this coin (JAX) only when there is a demand for it. Hence, bringing a coin that is stable in value to the Bitcoin network. So miners can choose which coin to mine, either BTC or JAX, which is more profitable due to sustainable revenues.

Since Jax.Network brings scalability and stability to the BTC system, it should also improve its value and provide miners with additional transaction fees and extra coinbase rewards in the form of JAXNET coins. They are issued on the beacon chain and can be used for speculation and as a store of value. These asset coins would eventually represent the value of the global transactional payment ecosystem and bring great value for Bitcoin miners.

Once our JaxNet protocol is up and running, there will be a vast amount of transactions that will be conducted on a regular basis via our native stablecoin JAX. The price of stablecoin is fixed, as well as the cost of mining, meaning miners can count on a long-term stable profit in the form of JAX coins and transaction fees. They have no reason to worry about price changes as in the case with speculative cryptocurrencies such as Bitcoin.

Conclusion

To sum it up, we would like to emphasize that cryptocurrency mining is a highly profitable activity that goes hand in hand with greater risks. Choosing the correct coin for mining can drastically reduce those risks. As you can see, anchoring our network to Bitcoin will increase mining opportunities and reduce the risks for miners. We at Jax.Network are extremely excited to bring value to miners and the ecosystem at large!

Don’t miss any announcement by subscribing to our social media accounts:

Official Website: https://jax.network

Twitter: https://twitter.com/CommunityJax

Facebook: https://www.facebook.com/network.jax/

Telegram Channel: https://t.me/jax_network

Official Group: https://t.me/jax_chat

LinkedIn: https://www.linkedin.com/company/jax-network/

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