When the most popular cryptocurrencies Bitcoin (BTC) and Ethereum (ETH) appeared, mining cryptocurrencies was just starting. Blockchain-based digital assets were a totally new thing and for years the crypto market was relatively small and confined mostly to tech-savvy individuals who believed that cryptocurrencies will become the financial instruments of the future. These people were among the first Bitcoin miners, who decided to participate in the blockchain with their computers and mine BTC.
A mere 10 years later, the crypto market has thousands of altcoins and spin-off currencies like Ripple, Bitcoin Cash, Litecoin, ERC20 tokens, and many more. If we only look at Bitcoin, this currency alone has achieved one trillion US dollars market value in 2021.
It’s no wonder that people from all around the world want to participate in the cryptocurrency ecosystem and get a share of the profits that can be made by mining and exchanging assets for fiat currency. Most people who want to deal with crypto assets buy some digital currency with their fiat money and start trading or investing in crypto through exchange platforms. However, there are also increasing numbers of people who decide to invest funds in mining currency directly, using their own computers.
In this guide, we are going to take a look at how mining cryptocurrency looks and why GPUs (graphics processing units) are considered the best hardware solution for obtaining digital assets.
How Does Cryptocurrency Mining Work?
When you hear about mining cryptocurrency you first think about Bitcoin. A Bitcoin miner is basically an auditor of financial transactions who uses their computer power to verify transactions on the Bitcoin blockchain. This way, miners are contributing to the network by making sure there is no double-spending.
The term double-spending refers to the possibility that someone could try to use their bitcoins twice, for two transactions. Because BTC is a digital currency with no physical form, a malicious individual could attempt to trick the system and use the same funds twice. This is why the blockchain uses the proof-of-work algorithm to verify transfers.
The blockchain requires each transaction to be confirmed by multiple nodes of the network. These nodes are in fact miners with their computers, so-called mining rigs, that are responsible for verifying the transactions. In this process, miners are discovering new blocks of the Bitcoin blockchain by solving mathematical problems that contribute to the verification of transactions. For solving these problems, verifying transactions, and effectively expanding the blockchain, miners are rewarded with BTC.
The first part of the mining process is to verify 1MB of transaction data, which can either be one, a couple, or even several thousand transactions, depending on the amount of data a transfer uses. Once done, a miner is eligible to get rewarded in BTC for their work.
However, not every miner gets the reward but only the one who, apart from verifying the 1MB data, is the first to solve the mathematical problem that opens a new block of the blockchain. So, basically, you need some luck to be the first miner who solves the problem in order to get your BTC.
To solve these problems faster and increase the probability of getting the right answer first, miners need to have high hash rates on their computers, which symbolize the capacity to solve these problems and find the 64-digit hexadecimal number or hash.
Why Is GPU Mining Better Than CPU Mining?
When Bitcoin appeared back in 2009 and the first miners started using its blockchain for transactions, CPU (Central Processing Unit) mining was a popular method for mining bitcoins. The power of your PC processor or laptop was good enough to mine BTC and get you rewarded. Bitcoin was worth almost nothing in the first years and there weren’t many people interested in mining it.
As the Bitcoin network grows, the mining reward in BTC gets halved every four years, but at the same time, the market value of the currency has increased to over 50.000 US dollars in 2021. Throughout the years, CPU mining became an obsolete method for acquiring BTC since the computing power of CPUs has long since been surpassed by GPUs (Graphics Processing Units).
Although you can still mine BTC using a CPU today, you will use enormous amounts of power, your computer could suffer a malfunction because of the pressure mining puts on the CPU, plus you will earn very small amounts of BTC that aren’t profitable at all.
GPU mining, on the other hand, is far more efficient with way higher hashing rates, and it’s the standard method for mining bitcoins today. The hash rates and processing speed of modern top-tier GPUs are incomparable to CPU processing power. So, if you want to mine bitcoins efficiently and profit from it, you should go with a GPU mining rig, or, if you’re prepared to invest serious funds in mining, you can buy an ASIC miner machine, which is the most advanced type of mining computer.
Mining Rigs: Computers Designed for Crypto Mining
If you decide to start mining BTC using a GPU, you need to get yourself a good mining rig. A rig is simply the expression used for computers that are configured for the sole purpose of mining cryptocurrency using all the computational power they have.
The most important core element of a mining rig is the number and type of GPUs that are going to be used. Rigs usually have between two and eight GPUs that are connected to a CPU, a motherboard that can accommodate connection to multiple GPUs, and an efficient cooling system. All of these elements are put together in a rig frame, which is similar to a PC housing, but larger.
When creating your own mining rig, it’s of key importance to be sure that all the hardware works smoothly together. Putting together a strong rig costs a lot of money since a GPU is one of the most expensive computer parts. You have to check that the motherboard can manage all the connected hardware, that the CPU is sufficient to provide the processing power for the motherboard, and that the GPUs can work with the other hardware in harmony. Also, you must create a strong enough cooling system with as many coolers as necessary to ensure that your rig doesn’t overheat and get seriously damaged. This can happen if you aren’t careful.
Power consumption is very high when mining cryptocurrency with a rig, so you either have to be prepared to pay high electricity bills or set your mining rig up someplace where the electricity is cheaper. Either way, the bills are another expense in addition to the initial investment in the hardware.
Graphics Cards That Are Great for Bitcoin Mining
Building a rig and choosing the best available components is a long-term investment. You have to spend considerable funds in order to start profiting after some time and see all that money come back to you, with interest.
Choosing the right GPU for the job is the key. Today, there are two main manufacturers that dominate the GPU industry, regardless of whether we are talking about gamers or bitcoin miners. NVIDIA and AMD are the companies that offer top-tier GPU products fit for creating the most efficient mining rigs.
The GPU market is quickly evolving, with new products being launched every few months. Currently, the NVIDIA GeForce RTX 3060 Ti, AMD Radeon RX 5700 XT, and GeForce GTX 1070 Ti are considered as some of the best available GPUs for mining.
NVIDIA GeForce RTX 3060 Ti
The NVIDIA GeForce 3060 Ti is a GPU ideal for crypto mining rigs. It uses the latest NVIDIA Ampere graphics card technology that provides insane performance and efficiency, regardless of whether it’s used for gaming or mining.
One of the main perks of this GPU is that it has a relatively high hash rate that can provide steady monthly income as part of a mining rig. The GPU comes with 8 GB RAM, a 60 MH/s hash rate, and consumes 200W of electricity.
AMD Radeon RX 5700 XT
The AMD Radeon RX 5700 XT is a GPU that relies on a special 7nm production process, which enables peak performance of the device. This model is great for mining and comes at a reasonable price, making it a good choice if you’re making a rig with several GPUs.
The hash rate is 54 MH/s, with 8GB GGDR6 VRAM memory, along with a 225W energy consumption.
GeForce GTX 1070 Ti
The GeForce GTX 1070 Ti is another good GPU for mining crypto, based on the NVIDIA Pascal GPU architecture that provides high-quality performance.
The hash rate is lower than the other two GPUs we mentioned, at 35 MH/s, but it also has a drastically lower energy consumption rate at 95W which still makes it a great choice for a rig. It comes with 8GB of RAM.
As you can see, mining cryptocurrency is rather complex and if you want to start doing it, you should definitely decide carefully on what kind of mining hardware you want to use. You ought to pay special attention to the GPU, since it’s the main component that will do the heavy lifting in the mining process.