Best Cryptocurrency Mining Hardware: From ASIC’s To GPU’s, Everything You Need To Know
DAVID BARTON, Lead Technical Writer
January 12, 2018
If you’ve been involved with the “crypto” space for any length of time, you’ll undoubtedly have heard of the term “mining” – used to describe the method through which new “tokens” for a number of the various systems are created. The typical image you think of with it as follows.
The point is that if you’re looking to cash-in on the new “crypto” craze, using your computing resources to “mine” the various “coins” is one of the better ways to do it (especially for the lower-priced “coins” such as Verge).
In order to do this, you need to understand not only how the system works, but also how the various “methods” of mining are actually designed. It all works in the same way, but with varying degrees of complication / effectiveness.
This tutorial is going to explain the overall process for “mining” the myriad of different “coins” available today. It is not a recommendation for “mining”, nor any “coins” in particular. It’s not a recommendation for the “crypto” space in general.
If you are seriously considering getting involved with the “crypto” space (from a financial / investment perspective), it’s strongly recommended you seek the advice of a regulated financial adviser (someone able to provide an overview of the entire financial “market” and how your money will be put to best use.
“Crypto” systems are entirely unregulated, and thus it’s important that you are able to discern which is fact from fiction. This tutorial aims to do that.
Mining hardware comes in all shapes, sizes, and price ranges.
How Mining Works
Before we get into the hardware, we need to explain how “mining” works.
“Mining” in the “crypto” world is the process of “hashing” new “blocks” for a particular “blockchain” (the decentralized database technology used by almost all of the “crypto” systems).
It works like this – each time you “use” the “Bitcoin” system (or any other “crypto” system – they all work in the same way), you have two pieces of software – the “wallet” (client side) and the “miner” (server side).
Unlike “standard” systems (which work by having a central data/service provider such as “Microsoft”, “Google” or “Amazon” etc), the “decentralized” nature of “blockchain” requires infrastructure to be deployed on 100’s or even 1000’s of servers around the world.
These servers are operated by “normal” people, meaning that there needs to be a standardized way for them to process any transactions sent to them by the various “wallets” on people’s smartphones or computer systems.
The point is that this “network” still has to calculate the various pieces of data – and the responses – that are required to operate the “Bitcoin” (or other) network. This is done via the “mining” system, which enables anyone with the appropriate hardware to calculate the next “blocks” in the particular “blockchain” systems, in return of a reward of new “coins”.
To better explain how it works, every “crypto” system works with “decentralization” technology. For all but 2 of the “crypto” systems out there, a system called “blockchain” is used to provide global computing power in a decentralized way.
“Blockchain” technology works by essentially adding new data (or “links”) to a “chain” – with each set of new data being called a “block”. These blocks are what the miners calculate in order to carry on the chain and be rewarded with coins.
Types of Mining Hardware
In order to “mine” a “coin” in one of the “crypto” systems, the “miner” essentially needs to “compile” a new “hash” of the entire “blockchain” file that the “crypto” system may have.
This means that – depending on how large the file is (Bitcoin’s is 100Gb and Ethereum’s is around 15GB), the amount of computing power required to “hash” the file can grow massively.
Contrary to popular belief, this is the only “difficulty” problem with the “mining” world (the size of the file to be processed). Most people think there is some special hashing technique or something, but in reality all the miners use the same server-side software – it’s just the sheer quantity of data required to be process that’s the problem.
This is where the various types of “hardware” come in for the mining world.
- CPU – Central Processing Unit (Intel/AMD processor)
- GPU – Graphics Processing Unit (NVidia/AMD chip)
- FPGA – Field-Programmable Gate Array (custom hardware)
- ASIC – Application-Specific Integrated Circuit (custom hardware)
Essentially, ALL “mining” works in the same way. What differs is how fast, and how accurately the “mining” operations take place. This is all determined by how many “hash” calculations a particular system can handle at once.
The default way this is done was through a “CPU” (Central Processing Unit). Whilst relatively effective, someone discovered that “graphics” chips (GPU’s) were actually much better at being able to calculate the various “hash” processes required of the “mining” operations.
This lead to the surge in people using their “graphics” chips to calculate new “crypto” hashes – further making the market more competitive. After this, custom hardware (in the form of Field-Programmable Gate Array’s and Application-Specific Integrated Circuits were developed to provide those who wanted the most effective “hashing” system to put an investment together.
This has lead us to the landscape we have today – a prevalence of “ASIC” machines (typically provided by BitMain/AntMiner) is absolute. To this end, the “mining” market has been taken into the realm of “mining pools” and “mining farms” – both of which utilize the added benefit of using multiple mining systems working on the same hashing algorithms.
The point here is that in order to determine which mining hardware is the “best”, you need to appreciate the “difficulty problem” of the “crypto” system you’re hoping to “mine” for.
Difficulty > Hardware
Ultimately, the “hardware” you use to calculate the various “hashes” for the various “crypto” systems is entirely dependent on the “difficulty” required to calculate it for that system.
As mentioned, Bitcoin has the highest difficulty because of its 21 million coin “limit” as well as having the largest number of “miners” working on the system. Ethereum has the second highest and most of the other systems vary accordingly.
The point is that in the “Bitcoin” world now, the only way you’re able to turn a “profit” with any of its “coins” is by using a “cloud mining” operation (similar to that pictured above).
These combine computing power (funded by monthly payments from its customers) which are able to work on the latest “blocks” in the particular “blockchain” databases as required.
The systems work effectively because of the large scale of the system – which rewards its financial backers by way of BTC after each successful hashing calculation.
Therefore, just like the “crypto” market itself, rather than looking at the various pieces of “hardware” you can use to calculate “hashes”, you need to look at the “difficulty” (and potential reward) of the systems – to which you’re able to allocate appropriate resources.