Mining basics
First of all, we must understand what mining is and how a transaction works in the Blockchain. The Blockchain exists so every transaction is confirmed and every user in the network can acces the Blockchain. By confirming this transactions, there can be no doubt between the transactions that are legit and transactions that are attempts to re-spend money. This is the part where the miners come in. Miners help the Bitcoin community by confirming every transaction and make sure each transaction is legitimate. The miner would get a reward every time a new block would be completely “sealed off “.
Aspects of mining hardware
However, when choosing hardware for mining, a miner should take into consideration the “Hash rate” and the Energy consumption. Breaking down each of the above, hash rate represents the number of operations (inputting random inputs to find a specific output) that your hardware can perform every second. In my opinion, this may be the most important parameter because a higher hash rate would definitely increase the chances you seal off the block and collect the reward faster.
In addition, having a high hash rate gives you an advantage among the other miners because nowadays mining is very competitive. Hash rates of hardware that was designed for mining cryptocurrency can range from 336 MH/s to 14,000,000 MH/s. The second parameter, energy consumption, represents how the bitcoin mining is as a whole an investment.
Energy consumption should be taken in consideration by every miner because in the end, the purpose of bitcoin mining is to make as much profit as possible, you wouldn’t want your electricity bill to be that expensive.
Types of hardware
CPU The least powerful category of Bitcoin mining hardware is your computer itself. CPU stands for Central Processing Unit, and implies your computer’s processor. It was the only way to mine Bitcoins back in the day, and it was extremely cost effective – all you needed was a computer with a powerful enough processor.
However, times changed and as the competition got tight, it isn’t effective at all to use your computer’s CPU. GPU GPU stands for Graphical Processing Unit, which is a feature of high-end graphics cards. These were designed specifically so that they can calculate all the complex polygons needed in high-end video games, which made them particularly great at hashing mathematics necessary to solve transaction blocks.
Despite costing several hundred dollars, GPUs gave miners a significant advantage over CPU hashing. For instance, a CPU will generally provide you with less than 10 MH/sec. On the other hand, an ATI 5970, one of the most popular graphics cards when it comes to mining, can give you over 800 MH/sec. This used to be a good way to mine bitcoins, but as hardware specifically designed for mining was invented, the Bitcoin mining difficulty has increased so much that graphics cards just simply can’t compete.
ASIC An Application-Specific Integrated Circuit (ASIC), is a microchip designed and manufactured for the sole purpose of mining Bitcoins at breakneck speed. It offers a 100x increase in hashing power, while reducing electricity consumption compared to all the previous technologies. Some experts consider ASIC to be the end-of-the-line technology, as there is nothing to replace it in the immediate future.
Top of the line chips like AntMiner S9 have an advertised speed of whopping 14,000,000 MH/sec, but such a device will cost you $1265. Of course, there are more affordable chips with a price tag of around $50, but their advertised speed is considerably lower. FPGA The next stage of Bitcoin mining development was the introduction of FPGA (Field Programmable Gate Array) mining.
FPGA is an integrated circuit designed to be configured after being built. This enabled a mining hardware manufacturer to buy the chips in volume and customize them specifically for Bitcoin mining, before putting them into their own equipment.
Mining pools
Having to compete against big companies and their mining farms may seem difficult as a beginner so you need to make a decision to go solo or join a pool. Pooled mining is a mining approach where multiple users contribute their computing power to the generation of the block.
A pool has a much bigger chance of solving a block and getting a reward, although that reward will be split between the members according to the contributed processing power. So, joining a pool might create a steady stream of income, even though each payment will be quite modest compared to a full block reward.