crypto mining equipment comes in many types, shapes and sizes
Cryptocurrency mining refers to the use of computer hardware to provide the computing processes of a blockchain network. Cryptocurrency mining is a way to help protect a blockchain network from attack, as well as financially incentivize miners on that network to help protect it. solve a block mining problem and you can receive the block reward, usually in the network’s proprietary currency. crypto miner, mining rig, bitcoin miner, mining hardware – these are just some of the names of the circuits, processors and computer hardware used to mine cryptocurrencies. While some crypto mining rigs are specially designed, general purpose mining rigs (much like your own computer) can also allow you to participate in cryptocurrency mining.
cryptocurrency miners are used on all blockchains that use proof of work (pow), which is the consensus mechanism used to securely process, verify, and confirm transactions, while preventing hacking. double spending and other blockchain attacks. the best known pow blockchain is bitcoin, although other established networks like ethereum 1.0 also fall into the category. In this article, we will look at the different options for cryptocurrency mining: from using general purpose circuits to custom mining hardware. If you’re looking to brush up on your crypto mining basics before this deep dive into the hardware, read our bitcoin: network security article.
Reading: Bitcoin mining rig
While mining rigs have various technical features, crypto miners generally care about two above all else: hash rate and power usage. Hash rate is measured in hashes per second (h/s) and is related to the probability of solving the cryptographic puzzle required to receive the block or mining reward. miners also tend to look at how much electricity a mining rig uses, including its total power consumption and its efficiency in terms of hashes per kilowatt-hour. Without sufficient hashing power and energy efficiency, a miner will not be profitable and could actually cost more in electricity costs than any mining rewards they would receive in return. while some mine simply to support the security of a network and the broader mission of decentralized networks, most crypto miners do so for profit.
is cpu mining still relevant?
cpu mining uses a central processing unit (cpu) to mine cryptocurrencies. CPUs can be found in everyday hardware such as laptops and desktops. However, unless you’re reading an article on crypto mining from the early 2010s, you probably won’t find mention of cpu mining in regards to bitcoin. That said, in the early days of bitcoin (btc) mining, bitcoin miners successfully mined blocks with the cpus on their laptops and desktops. This was possible because there were very few miners at the time and thus the overall hash rate was much lower when the bitcoin network was in its infancy. less competition meant a higher mining success rate. However, as bitcoin’s popularity increased, so did the competition, making readily available cpus mining btc largely obsolete.
Some blockchains have mining algorithms that have been designed to support cpu mining, including bytecoin, zcash, and monero. The main reason behind this design decision is to allow ordinary retail miners to profitably compete with the large-scale institutional miners that have come to dominate mining on other major blockchains. In addition to being more equitable, this also ensures that these projects maintain mining decentralization.
That said, cpu mining is a thing of the past for btc mining and many large cap pow blockchains. In such cases, CPU miners cannot use electricity as efficiently and their hash power cannot compete with other mining rig options. CPU chip mining is measured in kilohashes per second (kh/s), with one kh equaling 1,000 hashes. most of the best CPUs hit 8-20kh/s, with only a few (as of 2021) exceeding the 20kh/s threshold. these numbers pale in comparison to those other varieties of mining rigs.
gpu mining takes over
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As interest in blockchains and cryptocurrencies has grown, so has the number of miners and thus the competition for mining rewards. As a result of this cycle, most miners of most large-cap cryptocurrencies have ditched CPUs and started using graphics processing units (GPUs) to mine cryptocurrencies, as these systems tend to be more efficient for mining and have a much better hash rate. what cpu The first GPU mining software was released in 2010.
While cpu hash rates are measured in kh/s, gpu hash rates are measured in megahashes per second (mh/s), with 1000 kilohashes equaling one megahash (one million hashes). Performance varies depending on the age and price of the GPU, but many modern GPUs run at over 10 MH/s, with some of the best GPUs approaching 60 MH/s (as of 2021). To put this in context, a 40mh/s gpu miner has 2000 times more hash power than a 20kh/s cpu miner. GPU miners achieve these benchmarks because they can process many more operations in parallel than a CPU. In addition to this, many miners build mining rigs that have 6 to 12 gpus each, which multiplies their hash power. Some crypto mining enthusiasts even have multiple multi-gpu mining rigs running, with some home operations even going as high as 24-48 concurrent gpu rigs.
In addition to being much faster and more efficient than cpus, gpus also has some flexibility in being able to mine a variety of coins on different blockchains, with different mining algorithms. there are numerous coins that are popular to mine with gpus, with ether (eth) being one of the most popular as of 2021. however, with ethereum moving to proof of stake (pos), these miners may have to look elsewhere for profitable gpu mining rewards. While BTC’s GPU mining quickly supplanted CPU mining, its reign of mining dominance was also fairly short-lived. In 2015, BTC mining was dominated by a completely new type of hardware: ASIC miners.
asic miners take over bitcoin (btc)
short for application specific integrated circuit (asic), asic miners are designed to do only one thing: mine cryptocurrencies. The first ASIC miner was released in 2012 and was about 200 times more powerful than standard GPU miners at the time. while gpu computing power tends to be measured in mh/s, asic mining power is generally measured in terahashes per second (th/s), with one terahash equivalent to 1,000 megahashes (one trillion hashes). As of 2021, the best asic miners can compute 90-100 th/s, which far exceeds the best gpu miners. However, there are some disadvantages of asic miners that have prevented them from dominating the entire crypto mining sector. This is a significant cost and takes some time to try to break even, and even breaking even is not guaranteed. With different scales, electricity costs and network difficulties, buying asic miners could be very profitable, or just very expensive. In fact, a large number of Asics mining operations must be run at scale to be competitive, with warehouses that can be filled with hundreds or thousands of Asics. Furthermore, even the volatility of the cryptocurrency market itself can affect the profitability of crypto mining, as the price of these mined coins can fluctuate substantially, affecting the profitability models of expensive ASIC platforms and warehouses.
Furthermore, most asic miners are specialized to mine only certain coins or only certain algorithms used by a subset of cryptocurrencies. For example, an asic miner optimized for mining bitcoin is optimized for the sha-256 algorithm that bitcoin uses. therefore, even if a sha-256 miner could theoretically be used to mine coins that are based on other algorithms, it is usually more cost-effectively implemented in mining a cryptocurrency that is based on the sha-256 algorithm, such as btc from bitcoin cash (bch). This kind of specificity is part of why some blockchain projects are still dominated by GPU miners.
Also, some projects, like monero and ravencoin, are deliberately structured to remain asic resistant (meaning using any asic device is generally not profitable). such structural decisions are fueled in part by a desire to democratize the playing field of the network in question.
However, asic miner manufacturers have also released asic miners for litecoin (ltc) and other blockchains that use the same encryption algorithm that ltc uses. at least one asic miner optimized for ethereum’s ethash mining algorithm is already on the market, with third-party asic ethash miners scheduled for release in 2021.
are fpga miners the best of both worlds?
short for field programmable gate array (fpga), fpga miners are typically faster and more efficient than gpus for most mining algorithms, while maintaining the ability to reconfigure themselves to mine a wide variety of coins , something most asic miners can not do . For this reason, some serious miners consider the fpga setup to be the best of both mining worlds, because fpgas can balance strong hashing power with the flexibility of not being locked into mining a specific coin or algorithm. FPGA miners are called “field programmable” because they can be programmed or changed “in the field” after they have been delivered to a customer’s preferred destination. the “gate array” refers to logic gates that can be programmed and optimized for a specific purpose (such as crypto mining).
Depending on the fpga miner and the coin it is mining, throughput can vary widely, from several 100 kh/s to over 20 gigahashes per second (gh/s), with one gigahash equivalent to one billion hashes. FPGA miner costs also have a wide range, with prices that can range from $200 to $6,000. One downside of fpga mining is that the setup is generally not as user friendly as some of the other crypto mining solutions out there; you may need to design the gate array and software yourself. You can also download a Bitstream or FPGA mining algorithm, which simplifies the setup process, but a Bitstream FPGA may charge a developer fee, which could cost up to 8% of your recurring earnings.
cloud mining: crypto mining without equipment
Another option for mining is cloud mining. Just like you can meet your data storage needs by purchasing cloud storage, you can purchase a cloud mining service or contract with a cloud mining provider. this allows you to mine cryptocurrency indirectly without exposing yourself to many of the sunk costs and maintenance requirements of specialized mining hardware.
You can usually buy cloud mining contracts that vary in length (from weeks to years) and hash rate. These services can be cost competitive in many cases as the cloud mining provider usually has numerous warehouses full of high efficiency asic miners. Another option for cloud mining is remotely renting the asic miners themselves, although this option is not as popular as it once was. It gives the cloud miner more flexibility, but usually requires additional setup and maintenance costs, or substantial technical knowledge for those who want to set up miners remotely.
When demand increases, it can be difficult to find available cloud mining options, as these contracts sometimes sell out. One thing to watch out for when it comes to building a cloud is choosing a provider you trust. The early days of cloud mining saw a series of crypto scams known as exit scams, where customers paid contracts into fraudulent companies that ran off with customers’ money without honoring their contracts.
Are crypto mining platforms and pow blockchains here to stay?
Whether you rely on gpus, fpgas, asics or cloud miners, crypto mining as a whole remains an essential element of blockchain infrastructure. Despite the proliferation of proof-of-stake blockchain networks that bypass the mining process altogether, the demand for popular minable coins and their associated miners only seems to be increasing. It can even be difficult to buy the most popular asic miners as they are constantly out of stock, even on the secondary market. The rising hash rates of bitcoin and other popular blockchain pow projects are just another sign of how sought after crypto mining platforms have become.
That said, for many retail and institutional investors, it’s often easier (and more profitable) to directly buy desired digital assets directly from a centralized exchange (cex) or decentralized exchange (dex). Whether you mine cryptocurrencies, buy them outright, or choose a combination of the two, is generally a personal decision based on your own investment philosophy, time horizon, risk tolerance, technical knowledge, and a variety of other factors.
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