A Beginner’s Guide to Cryptocurrency Mining Rigs

Cryptocurrency Mining Rigs

April 11, 2018.
Here’s all you need to know about the different types of mining rigs

The implementation of cryptocurrencies in today’s eCommerce industry is undeniably growing at a fast pace, and with the widening acceptance of cryptocurrencies comes the continuing development of blockchain technology, including the methods of how it is mined.

As a recap, cryptocurrency mining is a computational process that achieves two things: firstly, it validates block transactions by solving a complex challenge and the transaction is subsequently added onto the blockchain, and secondly, new cryptocurrencies are minted as a way of incentivizing miners.

Cryptocurrency miners, just like gold miners in the real-world setting, need to have the right tools in order to carry out the mining process. This is all made possible through a mining rig, or a computer hardware system, and mining software.

For the purpose of this article, we will be focusing on the different types of mining rigs and their individual advantages and disadvantages.

Components of a Mining Rig

A mining rig can either be a dedicated system whose operation is specifically designed and reserved for cryptocurrency mining, or a multipurpose system that fills other functions, such as being a gaming system and reserving mining on a part-time basis only.

A typical mining rig is comprised of the following hardware components:

– Power supply
– Motherboard
– Memory
– Graphics card/GPUs
– Storage
– Optional Peripherals: keyboard, mouse, and display

Different Types of Cryptocurrency Mining Rig

1. CPU Mining
Bitcoin, the first cryptocurrency ever to be introduced and implemented, was initially designed to enable mining on a normal desktop computer’s CPU. However, as more developments to the blockchain technology was introduced, CPU mining was found to be inefficient since the cost of power to operate the mining became more than the monetary amount of Bitcoins awarded. To date, CPU mining is considered as largely obsolete, though some people still use this method of mining as a way to get started in the cryptocurrency industry.

2. USB Mining
Another type of mining hardware used by those who just want to lightly dabble with cryptocurrency mining is through a USB miner. There have recently been flash drives that are especially designed for mining, and it can be profitable to use one instead of a generic flash drive. USB flash drive mining offers the advantage of consuming less electricity and the hardware itself isn’t as expensive compared to the other mining rig types. However, in some cases, USB mining will still reach a point where it eats up more power than what it can earn. This option is great for neophyte miners who want to see how mining works, but it’s not very profitable in the long run.

3. GPU Mining
GPU mining is an upgrade to CPU mining, in that the hash rate is enhanced by adding graphics hardware computing power to your CPU mining rig. These graphics cards feature Graphical Processing Units (GPUs) that are designed to perform heavy mathematical calculations, much like what is required for high-end video games, and in the case of cryptocurrencies, in repeatedly performing complex algorithms required in mining. AMD and NVIDIA are currently the two main and renowned vendors of graphics cards.

The main advantage that GPU mining offers is that it can be used to mine other cryptocurrencies other than Bitcoin. This is a great option for miners who want to switch between different cryptocurrencies. However, compared to the more sophisticated and robust ASIC mining rig, GPU mining isn’t as powerful, fast, and power-efficient.

4. ASIC Mining
Application-Specific Integrated Circuits (ASICs), as the term suggests, are devices that are customized for a particular use, as opposed to other multi-purpose integrated circuits. In the context of cryptocurrencies, ASICs are specifically designed for mining and for that purpose only. They are essentially dedicated mining rigs that cannot be used for other applications.

ASICs offer the main advantage of providing high hash power and are able to mine cryptocurrencies at high speeds. It also uses up relatively low power consumption, making it an ideal choice for large-scale mining and cryptocurrency operations.

However, as ASICs are limited to the sole application it is designed for, it is also tied to a specific cryptocurrency and mining algorithm. Any major changes to the algorithm or the blockchain technology itself may render the ASIC mining rig useless. With that said, ASICs lack the versatility of standard ICs, which means that you can’t switch to other cryptocurrencies when mining a certain cryptocurrency with an ASIC mining rig.

Another potential disadvantage to ASIC mining is that there are certain cryptocurrencies with algorithms that are ASIC-resistant, such as Ethereum and Monero. ASIC resistance means that there is no significant speed up in hash rate when mining is done on an ASIC mining rig, compared to a GPU-based mining algorithm implementation. With these cryptocurrencies, no matter how powerful your mining rig is, their algorithm is designed in such a way that you spend the same amount of time solving mathematical problems compared to non-ASIC rigs.

Furthermore, despite ASIC being the most ideal hardware for cryptocurrency mining, it’s not as widely used. It can be more expensive than the other types of mining hardware, and since it’s time-consuming to produce, there are only a limited number of suppliers. Currently, Bitmain is the leading supplier for ASIC mining rigs.

Choosing a Mining Rig

When choosing a mining rig, there are two main things to consider aside from the price:

– Hash rate: This is the number of calculations that your mining hardware can perform every second, measured in megahashes (MH/sec), gigahashes (GH/sec), or terahashes (TH/sec) per second. The higher the hash rate, the quicker and more likely it is for a miner to solve the blockchain challenge.

– Energy consumption: This is the computing power measured in watts. Typically, the mining process in itself consumes an incredible amount of energy, sometimes even costing more than what a miner could possibly earn. It is ideal to choose energy-efficient hardware to maximize your investment.

To determine the relative efficiency of mining rig hardware, consider how many hashes you can achieve for every watt of electricity consumed. To do this, simply divide the hash rate by the energy consumption in watts. You can also go to CryptoCompare or CoinWarz.com to help calculate profitability.

Closing Notes

With cryptocurrency mining becoming increasingly competitive and the mining challenge getting more and more difficult to solve, it’s crucial for serious miners to invest in a mining rig that offers the best possible hash rates and the most efficient power consumption features. To be able to get the highest profitability, however, it’s important to get access to cheap electricity. On the other hand, if you’re a cryptocurrency enthusiast who simply wants to see how the whole system works, it’s not a bad idea to start off with cheaper and lesser efficient mining hardware, such as a GPU rig or a USB miner.

– Article written by Tinny

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Categories: Blockchain, Cryptocurrency