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The Impressive Hardware Used in Cryptocurrency Mining

The power required to facilitate profitable mining is substantial, to say the least

Cryptocurrency like Bitcoin, LiteCoin, PotCoin, and so on, are a form of digital currency designed to be both secure and anonymous. By leveraging a type of cryptography, the information is converted into a complex code that is nearly impossible to crack. Enter cryptocurrency mining.

This process leverages gargantuan amounts of processing power to secure and verify transactions, while also releasing new currency. A reward is given to the first computer that mines the block, which is a file containing transaction data. This is a lucrative business for those with enough computing power. Join us as we dive into this concept, and learn what kind of hardware is required to pull off these miraculous calculations.

How Does Cryptocurrency Mining Work?

The appeal of cryptocurrency lies in the security and anonymity of transactions. While the security of such currency is attractive, many people flock to these forms of payment to avoid going through banks. If the infrastructure fails, these currencies remain unaffected.

While Bitcoin was the first to make significant waves in 2009, today there are over 900 different types. These currencies run on a blockchain, which is a shared ledger duplicated across a network of computers.

Each “block” in the chain contains a record of recent transactions and a reference to the block before it. These blocks also contain the answers to a complex mathematical puzzle. The first user to correctly solve the puzzle “mines” the block and receives a reward. There are multiple valid solutions to each block, but only one is required.

The document is available to all holders of the currency. Every transaction and exchange of ownership is recorded in the blockchain. Miners are people who leverage incredible computing power to tally the various transactions.

They are tasked with updating the ledger each time a transaction is completed, while also verifying the authenticity of the information within. Individual blocks added to the chain by miners contain a proof-of-work or PoW.

Miners use specialized computer rigs and software to compete with other peers. The computer attempts to solve a block by using cryptographic hash functions. A hash value is a numeric value of fixed length that identifies data.

The computers seek out a hash value less than the target. Whoever cracks the code first is the one who “mines the block.” Miners are paid in cryptocurrency as a fee for this service when they successfully mine blocks in the chain.

This eliminates fees associated with banks, credit cards, or other types of middle-men. While the identity of the buyer and seller is kept hidden, every transaction is made public to the members of the blockchain network.

These currencies are obtained through online exchanges and can be traded for traditional currency like US dollars. The value fluctuates, based on supply and demand. Buyers and sellers agree on a value that is based on the trading rates elsewhere.

As a result of this opportunity, many organizations both large and small are building their hardware to consistently run these calculations and earn revenue through successful mining.

3 Types of Hardware Used in Cryptocurrency Mining

While there is a clear winner in today’s hardware market, there are three types of hardware typically used in the mining process. Let’s take a look at the pros and cons of each:

1. Application Specific Integrated Circuit (ASIC) Mining

An ASIC is a microchip designed to execute hashing algorithms as fast as possible. This hardware is able to calculate hashes 100,000 times faster than the world’s best CPUs.

They are built with a specific hash algorithm in mind, so you would need to purchase one designed for the specific types of coins you’re seeking to mine. Since they are extremely powerful and used exclusively for mining, these things can run upwards of $3,000.

There’s a constant arms race in the cryptocurrency mining world, so while your ASIC could be profitable the first month, that profit will decrease as hashing power increases in other hardware.

A group of ASICs in a mining farm

Since this hardware performs trillions of hashes per second, a major downside is the heat they give off. To keep them cool, you’re going to need a lot of fans, which will in turn create a significant amount of noise.

I recall a friend of mine who built his own Bitcoin mining rig. He jokingly told me he would strap ice packs to the rig just to keep it from overheating. There’s also a major drain on electricity with this hardware, so many mining organizations are in countries with cheaper electricity.

To stay competitive, countries like China are building massive mining farms that are filled with ASICs. To get an idea of just how powerful (and power hungry) these miners are, let’s take a look at the specs for a high-end modern solution known as the Bitmain Antminer S9:

  • Hashrate of 14 TH/s (That’s 14 trillion hashes per second)
  • Average cost of $2100
  • 1600 Watt power supply (sold separately)
  • 189 chips, spread over 3 circuit boards

In reality, it would take a single ASIC like this about one year to offer a positive ROI, and that’s assuming factors stay consistent, which isn’t likely. This is why true profitability is achieved with multiple ASICs.

2. Graphics Processing Unit (GPU) Mining

While not quite as powerful, you can also mine cryptocurrency using your computer’s GPU. This hardware is most commonly used for handling graphics in PC gaming, but the processing power can also handle hashing mathematics for solving blocks in the chain.

Now, you’re probably wondering why we would choose the GPU over the CPU. It’s a valid question and one that comes down to numbers. While CPUs from AMD and Intel could once mine Bitcoin like it was going out of style, they’ve since fallen behind.

High-end GPUs from manufacturers like NVIDIA and ATI are the ones you’ll want. An ATI 5970, for example, offers roughly 800 million hashes per second. With a CPU, you’re lucky to get 10 million. It’s not quite the speeds we see with ASIC hardware, but it’s respectable nonetheless.

GPUs also offer heightened flexibility over ASIC. One type of GPU can mine several different currencies without any issue. The biggest problem with GPU mining is the rise of ASIC options, which are far more efficient.

Even so, if you can utilize a motherboard that can support multiple GPUs, you can enhance your hash rate this way to stay competitive in the network.

3. Field-Programmable Gate Arrays (FPGA)

FPGAs are integrated circuits with logic blocks programmed and configured using a hardware description language (HDL). They essentially offer a specialized hardware solution built from the ground up for cryptocurrency mining.

Since the chips are designed for this purpose, they can offer performance improvements over CPU and GPUs. By today’s standards, they are merely matching the hash rates of high-end GPUs, but they do have an edge: power consumption.

FPGAs are known for their ability to function in low-power environments, making them more cost-effective from an energy standpoint.

Building Your Own Rig

Once you’ve chosen your hardware, power supply, and cooling solution, you can move on to the software side of things. Depending on the currency you’re targeting, and the hardware you’re using, the software will vary.

If you’re still in the planning stages, consider using a profitability calculator. This will let you put in your hardware specs, hash rate, power consumption, and current market prices to gauge how much you could expect to make with your rig.

While it can be a lucrative market, the constant competition makes it hard to maintain profits. In either case, there’s no denying that the hardware used for this kind of processing is truly impressive.




Discussing the business of hardware and hardware manufacturing.

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Bradley Ramsey

Bradley Ramsey

Technical Writer at Supplyframe. Lover of dogs and all things electronic.

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