1. Huge expenditures: To run the complicated algorithms, mining

requires highly specialized computer hardware leading to costs

becoming unmanageable. Mining becomes available only for special

mining pools. Cost is increased as these specialized machines

consume large amounts of power to run. The large costs involved

threaten the centralization of the system.

2. “ Uselessness” of computations: To generate blocks, a lot of work is

done by miners, which consumes a lot of power. These calculations,

however, are not applicable anywhere else. They do guarantee the

security of the network but cannot be applied to any other field.

3 . A case when a user or a group of users control the maj ority of the

mining power is a 5 1%

attack.

The attackers get enough power to control most of the events in the

network. They can monopolize generating new blocks and receive rewards

since they are able to prevent other miners from completing blocks. They

can also reverse the transactions.

Let us assume A sent B some money using a blockchain. A is involved in

the 5 1%

attack case, B is not. This transaction is placed in the block. But

the attackers do not let the money to be transferred. There is a fork

happening in the chain.

Further, miners j oin one of the branches. And as they have the maj ority of

the computational power, their chain contains more blocks.

In the network, a branch that lasts longer remains, and the shorter one is

rej ected. So, the transaction between A and B does not take place. B does

not receive the money.

Following these steps, the attackers can reverse transactions.

Fifty-one percent attack requires an enormous amount of mining power

and is not a profitable option. The moment it gets public exposure, the

network is considered compromised, resulting in the outflow of users. This

shall inevitably move the cryptocurrency price down, and the funds lose

their value, consequently.

Proof of stake