Just as the name suggests: it’s hardware that is used to mine bitcoin. There are numerous different types of hardware you can use, such as GPUs, ASICs or FPGAs, and each has its own advantages and drawbacks. This page explains everything you need to know.
Where can I find the best bitcoin mining hardware?
Right here. We have found and reviewed all the options available and only narrowed down to the best bitcoin mining hardware to get you started. Check our comparison table for the best option.
What are the different options?
There are various types of mining hardware. During the early days of bitcoin, mining was nothing more than a hobby for the nerdy cryptocurrency enthusiasts. Back then, the only hardware required was a regular computer. You could even use your laptop and mine bitcoins. However, things changed as mining difficulty increased. More powerful and specialised hardware was needed to do mining. The most common forms of hardware today are:
These are the hardware where all the action really is. The ASICs (Application Specific Integrated Circuits) are specifically developed to mine bitcoins quickly with relatively low power consumption. They work at incredible speeds, generating more hashes per watt of power. The best thing about them is that they are almost ready for use when they arrive. You can just plug them in, and with a few configuration settings they are ready to go. But because these units are specifically designed for bitcoin mining, their resale value is low. Some of the most common ASICs hardware in the market includes Bitmain Antminer S5, Antminer T9, AvalonMiner 741, and Bitmain Antminer D3.
The FPGAs (Field Programmable Gate Array) are the former kings in the world of bitcoin mining before the ASICs were introduced. They offer significant improvements over GPUs, and the single chip FPGA can guarantee approximately 750 Megahashes/second. Compared to ASICs, these units are not very effective since they consume a lot of electricity to produce their power.
GPUs were used in the early days of bitcoin mining and are still an option today. Their effectiveness makes them good at solving the SHA-256 hashing mathematics that is necessary for verifying blocks on the bitcoin blockchain. Unfortunately, because of the increased difficulty of bitcoin mining, GPUs have become ineffective. Only those who want to do mining for fun or are interested in the technology behind it often use GPUs. But because GPUs are multi-purpose, they have a high resale value if you ever wanted to stop mining. GPU manufacturers such as Nvidia and ATI are also committed to developing GPU cards that are specifically honed for bitcoin mining so there could be a resurgence in GPU mining soon.
Why can’t I just mine with my computer?
Because it isn’t nearly powerful enough; mining would likely break or damage it. The difficulty of bitcoin mining as of now is so great that it requires a very large amount of processing power and energy to solve the computational problems involved, beyond anything a regular computer could cope with. You need to use mining-specific hardware.
How do I set up my own mining rig?
You mostly don’t have to. Most manufacturers will sell rigs already set up and ready to go. Sometimes you might be needed to download software or a bitcoin client, which can take hours to days depending on the speed of your machine, but usually, that’s it. If you want to enjoy the thrill of building your own rig, you can set up a GPU and experience it yourself, but it’s not necessary in order to mine.
Can I set up a mining rig in my house?
You can, but you will have to bear the heat and noise generated by the mining rig. Because of a large amount of energy being used, mining hardware generates a lot of heat. To cool down the heat, the units have fans that rotate at incredible speeds, which ends up making a lot of noise. You can set up the units in a secure garage or away from your main house or even consider renting some space, but before setting up a mining rig give some thought to where you can put it.
Do I need to download any software?
Yes, while the actual mining is handled by the hardware itself, you will have to download the software required to run it. This software is referred to as a ‘mining client’ and connects your mining rig to the bitcoin blockchain or mining pool (if you’re part of one). Different products will require different software, with each specifically designed to be compatible with Linus, Windows, or Mac OSX. Some of the common software options include CGminer, BFGminer, BitMiner, and BTCminer.
Is bitcoin mining profitable?
It depends. Early on, it used to be a lucrative venture because you could just do it using your laptop. Today, you need to invest in a lot of technology to make decent profits, meaning that it will take quite some time to regain. But if you are looking to do it as a long-term investment, it can be profitable in the long-run, provided you go about it correctly. Here are some factors you need to consider:
- Electricity costs. These are one of the primary concerns if you are running your own mining rig. Since bitcoin mining requires a lot of energy, the mining rigs consumes a large amount of electricity, which translates to high cost of electric bills.
- Cooling costs. The side effect of all the electrical energy used is a lot of heat, which needs to be cooled down. Achieving this is difficult and costly since you will need to set up your mining rigs in a cool area and purchase more tools such as extra fans to facilitate cooling.
- Mining pool fees. Mining pools charge fees for being a part of them, so these will impact the level of profit you will make. Generally most of them will charge you around 1% – 3% of your profits.
- Popularity of mining. Bitcoin mining is designed to become more difficult as more people do it. As more miners join the network, the block creation rate increases and so does the mining difficulty. This means that an upsurge in miners will lower profits of mining.
- Bitcoins released per block. As the number of bitcoins approaches the 21 million cap, mining rewards fall. The block reward is halved after every 210,000 blocks, which is roughly 4 years. In 2009, the block reward began at 50 BTC, and in 2018 it’s come down to 12.5 BTC per block. This reward will be halved again in 2020 to 6.25 BTC.
- Fluctuations in value of bitcoin. It is hard to measure profitability of mining because of the changing value of bitcoin itself. If the price of bitcoin rises, mining will become more profitable, but if it falls then profits will fall or be wiped out. Many people consider bitcoin mining hoping that prices will rise so that they can get considerable profits.
That’s a lot of factors, how do I figure out if it will be right for me?
There are many bitcoin mining profitability calculators around which you can use to get an idea if the venture is really worth it. You can put in all the information and they will give you estimates of how much money you’ll make. You will be asked to enter your hashing power (H/s, KH/s, MH/s, GH/s, or TH/S), power consumption, and the pool fees. For a more accurate figure, there are online bitcoin mining profitability calculators that will need you to enter extra details such as hardware cost and power cost.
Do I need to have a wallet before I start mining?
Yes, if you want to mine for yourself, you’ll need a wallet where all the bitcoins you mine will go. However, if you are joining a mining pool, all your proceeds will be credited in your account, which you can then move to your wallet at a later time (it is advisable to move your coins in this way as it keeps them safe).
What is a mining pool?
A mining pool is a group of bitcoin miners working together and sharing the rewards. Mining pools combine resources and share all their miners’ processing power, splitting the income according to the amount of work each miner has contributed. By miners banding together in pools, they increase the odds of being rewarded for solving a block, allowing them to have more regular returns. Think of it like a large group of people playing betting on different horses in a race and agreeing to split the resulting winnings between them. The rewards may be smaller, but there’s a far greater chance of consistent income.
Why shouldn’t I just mine on my own?
You can, but chances of making decent profits will be very minimal even with a powerful hardware. Joining a mining pool will help you and other participants pull resources together to have a greater hash rate to increase your chances of solving the computation problems and earn the set block rewards.
Should I get involved in bitcoin mining?
Frankly, it’s up to you. If you are into the technology and see mining a fun, lucrative activity, then mining bitcoin can be viable investment. Remember though that it’s unlikely to generate huge profits in a short space of time and should be seen more as a long-term investment.
How do I get started?
Read read read, and continue learning before starting. You still need to learn more about cloud mining, up next…