What equipment is needed for cryptocurrency mining
Almost all existing cryptocurrencies are decentralized. That is, anyone with the right equipment can become a miner and create new coins. Indeed, for their work on confirming transactions in the network, miners receive a reward in the form of newly created coins.
The more popular the coin, the more stable and popular it is, the more people want to mine it. Thus, there is a lot of competition between miners. After all, the number of coins issued is limited by the source code of the coin itself, and as many people as possible want to get a coin.
In order to obtain the right to mine a block and accordingly receive a reward for the mined block, the miner must be better than others, that is, possess more advanced and productive equipment to get around its many competitors. The more popular the coin, the greater the competition and the more difficult it is to get it.
This forces miners to constantly improve their mining equipment, to buy new equipment, capacities. In addition, the manufacturers themselves are not standing still. Constantly they invent and offer for implementation something newer, more perfect and productive. The technology race continues.
Mining of many cryptocurrencies is based on this. The one who has more advanced equipment wins. He is more likely to guess the block hash and process transactions. Hash processing is done by sorting through random numbers.
The more powerful and productive the equipment, the faster it goes through the numbers and finds the correct result. The miner who wins the hash faster and gives the correct answer wins.
This is the general principle of almost all cryptocurrencies using the PoW consensus algorithm. But there are other consensus algorithms. In addition, different cryptocurrencies have different hashing algorithms. That is, the hash is solved in different ways. To solve it, different keys and different programs are used. Because of this, there is no universal mining equipment.
Creating a new cryptocurrency, creators often create their own hash encryption system and its decryption, that is, guessing. The less popular the cryptocurrency, the fewer miners mine it, the easier it is to mine. The goal of any cryptocurrency in the early stages is to attract the crypto community, including miners for mining. Therefore, new cryptocurrencies can be mined on simple computers. But the question is, who needs a cryptocurrency that is easy to mine?
The harder it is to mine cryptocurrency, the higher its production cost, the more desirable and higher its price.
Everyone wants to mine Bitcoin because the Bitcoin ecosystem is the most developed. Bitcoin has the highest price among cryptocurrencies, it is easy to buy and sell. But such a developed Bitcoin infrastructure leads to the biggest competition among miners. And the one with the most powerful and productive equipment that has access to the cheapest electricity wins.
The developers of new cryptocurrencies, seeing the energy costs of mining Bitcoin, began to come up with cryptocurrencies with hashing algorithms that can be mined on video cards so that access to mining is possible not only for large corporations with professional equipment, but also for simple miners. For example, Ethereum.
But as soon as the cryptocurrency becomes popular, as only an increasing number of miners want to mine it, manufacturers immediately come up with specialized ASIC equipment that allows you to mine this cryptocurrency on an industrial scale and which is much more productive than video cards. And miners buy this equipment to gain a competitive advantage.
There is even such a cryptocurrency as Monero, the creators of which constantly change the hashing algorithm, so that it can be mined both on processors and on video cards. But this led to the fact that Monero became the most popular cryptocurrency for hidden mining virus programs, because Monero can be mined on everything, even on DVRs. It’s unrealistic to mine Bitcoin on DVRs. Therefore, Bitcoin is practically not used for hidden mining programs, because it must be mined on a professional and highly specialized device. Only in this case, mining cryptocurrency makes sense.
Therefore, mining equipment is very diverse. It all depends on which cryptocurrency you want to mine.
How exactly does cryptocurrency mining happen – for what does the miner get a reward
Let’s see how cryptocurrencies work and why miners are generally needed.
Cryptocurrencies are decentralized. And this means that in the blockchain everyone is equal, there is no leader, no master, no main thing. But in this case, anarchy arises, since no one will listen to anyone and carry out decisions. All are equal and everyone has the same opinion, and everyone has their own opinion.
In such an environment, there needs to be agreement within the blockchain. And this means that it is necessary that the decisions of the minority (miners) are implemented by the majority – all users of the blockchain. And for this, consensus is needed. In cryptocurrency blockchains, consensus is achieved in many ways. The first and most popular way is PoW consensus. The miner must do the work to process the transaction and receive a reward. And other miners confirm his work. Other network users agree that the work is done.
It is believed that this is the most democratic way to achieve consensus. After all, any person with the corresponding capacities and equipment can become a miner. But the problem arose when cryptocurrency began to gain popularity and miners with more expensive and advanced equipment and access to cheap electricity began to win. It has become impossible to speak about democracy. The winners were those with more resources. In addition, more and more electricity began to go to mining. Here the authorities of the states and ecologists were already indignant.
Therefore, cryptocurrency developers began to come up with other ways to achieve consensus within the network. The second most popular PoS algorithm is bet confirmation. It is won by those miners who have more of this cryptocurrency in their wallet. In this case, there can be no talk of any democracy. After all, the one who has more resources also wins. Only unlike PoW mining, where you need power resources and cool equipment, in PoS mining you need cash resources. But it does not spend a lot of electricity. Ecologists are satisfied.
Unfortunately, the idea of equality and socialism, when everyone is equal and ruled by equals among equals, which was originally conceived in cryptocurrencies, in practice led to the fact that those with more resources win. After all, society obeys those who have access to cheaper resources and greater capacities, as in the case of the PoW algorithm, or those who have more money, as in the case of the PoS algorithm.
Now cryptocurrency developers are trying to come up with consensus in which true equality and democracy would be achieved. Wherever people voluntarily agree to submit to those who are equal to them and would be on a par with everyone. But unfortunately, as experience has shown, the algorithm used by Monero, when anyone can mine cryptocurrency due to the constant change of hashing algorithms on any equipment, has led to the fact that cryptocurrencies are simply stolen using hidden mining programs. 5% of all Monero are mined illegally.
What equipment is Bitcoin mined for – ASIC
Bitcoin is the first and most popular cryptocurrency. Despite the fact that, at the moment, there are more than 2100 cryptocurrencies and tokens in the world, so far the Bitcoin dominance index is 52.5%. This means that most miners prefer to mine precisely Bitcoin. This is the most expensive cryptocurrency, the most popular, it is easiest to sell. But the competition among miners is the highest.
This means that in order to win the competitive race for mining the Bitcoin block, the miner must have the most modern and powerful computing equipment. But such equipment consumes a lot of electricity, it takes up space. To ensure that the mining equipment does not overheat, powerful cooling is necessary, which also takes up space and consumes a lot of electricity.
Already after 2011, it became impossible to mine Bitcoin on video cards. Manufacturers began to come up with special equipment whose sole purpose was the mining of Bitcoin. The more the popularity of Bitcoin grew, the higher its value was, the more miners poured into its mining. The complexity of mining the block continued to increase, which forced the miners to race for the block, not only buying the most modern and productive ASICs, but also building entire farms from them, combining all the equipment purchased in a single whole. Cheap electricity in China and proximity to the production of equipment led to the fact that Bitcoin mining was concentrated in one country. A positive attitude of the Chinese authorities towards cryptocurrencies further contributed to the acceleration of their development and monopolization of the market. Subsequently, the authorities tightened their cryptocurrency policies. But before that, many industrial mining farms were created in China, just as the industrial production of ASIC equipment appeared. So far, 70% of all cryptocurrencies are mined in China.
On an industrial scale, ASIC equipment is manufactured only in China. In other countries, unique farms can be produced to order specific buyers, but such models are single. China has conquered the entire market of both industrial mining and the production of specialized mining equipment.
Features of ASIC Antiminer S9 for Bitcoin mining
ASIC Antiminer S9 is currently one of the most popular Bitcoin mining ASICs. Now there are more powerful and modern devices for Bitcoin mining, but due to the general fall in cryptocurrency prices, they are not in demand. And the prices for ASIC Antiminer S9 have now dropped many times.
The thing is that in most regions of the world, Bitcoin mining is not profitable for purely economic reasons due to the high cost of electricity. Therefore, many miners are selling their ASIC Antiminer S9. Yes, and manufacturers in stocks accumulated a large number of ASIC Antiminer S9. Therefore, ASIC Antiminer S9 can be bought quite cheaply.
How to mine Ethereum – video cards (GPU)
Ethereum, unlike Bitcoin, can still be mined on video cards. Of course, it is better to mine not on single video cards, but on farms of 4-12 video cards. Creating and setting up a farm is best left to a professional if you are not good at it. Agree, it will not be very pleasant if the farm that you assembled and set up suddenly burns out.
For Ethereum mining, it is better to use the following video cards:
- NVIDIA GTX 1080
- NVIDIA GTX 1070
- NVIDIA GTX 1060
- AMD RX 480
- AMD RX 580
The fundamental difference in the purchase of GPU and ASIC
Above, we calculated the farm payback of 3 GPUs and ASIC equipment. It all depends on the cost of electricity in your area. But approximately the payback period is the same. ASIC equipment is 2 times cheaper, but it also pays for itself longer.
On the other hand, at the moment, ASIC equipment has fallen in price many times and it is very difficult to sell it, since in many places Bitcoin mining is lower than the cost. If you are one of those lucky ones where it is profitable to mine Bitcoin, then it should be noted that ASIC equipment is very noisy, consumes a lot of electricity and is very hot. If you live in an apartment building, then neighbors may complain about you.
On the other hand, ASIC equipment has already been assembled, used equipment is already configured. To assemble a mining farm, additional knowledge is required, in addition, you need to buy additional equipment that will significantly increase the cost of the mining farm, and, consequently, its payback.
But selling separately used video cards will be much easier than ASIC equipment. On the other hand, second-hand ASIC payback – 47 months, farm from second-hand video cards –
44 months. Used equipment just doesn’t live that much. Thus, at the moment, it turns out that buying mining equipment in the existing market is not profitable under almost any conditions.
Bitcoin farms – ready-made solutions for mining Bitcoin
Customized mining solutions were popular in the era of the growth of the Bitcoin exchange rate. Typically, such equipment is made to order, so that the miner has advantages over its competitors. Therefore, due to individual manufacturing, the cost of such equipment is higher than the cost of the popular industrial ASIC Antiminer S9. Unfortunately, now that even the used ASIC Antiminer S9 pays off for 47 months, there’s no reason to talk about the appropriateness of buying individual mining solutions. Not a single equipment has lived for so long, much less used around the clock on an “industrial” scale.
The use of heat from mining
As you know, cryptocurrency mining generates a lot of heat. In winter, many miners adapted to use the generated heat to heat the premises. Some have underfloor heating. There are even miners who heat the pool in their home from the heat generated. But for this you need to have a pool to heat it. In addition, heating of houses from mining equipment is relevant only for the northern regions and then only in the winter.
In summer, on the contrary, air conditioners are needed to cool the rooms, and the equipment overheats especially hard, which is why the cost of electricity increases several times, since it requires large cooling capacities.
Pros and cons of a turnkey farm
Turnkey farms were especially popular in 2017, at the beginning of 2018, when video cards were so popular that they could not be bought. Therefore, cunning entrepreneurs appeared who had access to Chinese manufacturers, bought video cards in large volumes and independently formed farms from them.
The advantage of such farms was that the buyer did not have to think about delivering cards, compiling a farm, setting up equipment and software. Specialists did everything for him. This was especially convenient for beginners who were poorly versed in technology. Naturally, I had to overpay for such services, but in the conditions of a growing cryptocurrency price market, such an overpayment was justified, since the buyer received a finished and customized product, and the seller was responsible for all the delivery and setup of the equipment.
Now a lot of turnkey ready-made farms are being sold that were in use, since mining has become unprofitable. But it’s one thing to buy new equipment that is specifically designed and customized for you, it’s another matter to use a farm where you have mined for some time and no one can tell how long the equipment will last and give some kind of guarantee.
Unfortunately, now the cryptocurrency market is in such a state that there are much more sellers of mining equipment than buyers.
For what period does the mining farm return to payback
It all depends on the cost of electricity in your area. For example, where I live, electricity costs 0.06 kV / h. And that means second-hand
ASIC Antiminer S9 will pay off in 1430 days, and the new ASIC Antiminer S9 will pay off 2850 days. As you know, during this time, even if the equipment will work, it will become very old and will not be relevant for Bitcoin mining. For this reason, prices for ASIC equipment have now fallen so much.