Understanding Bitcoin mining hardware

The hardware used to mine Bitcoin has changed quite a bit since the digital currency was first introduced in 2009. As the difficulty to mine a block has gone up, the hardware used to stay profitable has gotten more specialized and efficient.

Mining hardware has to do a couple of things to be successful. It needs to perform calculations fast enough to mine the next block and award it to the rig’s owner, and it needs to do so efficiently enough to turn a profit.

The reward of each block is 12.5 Bitcoin in 2019, and the price of the coin determines how much that will be. The cost to mine that block depends on the efficiency of the hardware in performing its calculations, which can be determined by the amount of power it needs to run, and how much that
power costs.

In 2009, the difficulty to mine a block was fairly low, and just about anyone could mine Bitcoin using the multi-core processor in their personal computer. The price of Bitcoin was low, but so was the cost of running a consumer grade computer.

As the difficulty of mining Bitcoin steadily increased over time, the hardware needed to evolve to meet the task. In the early 2010s, Bitcoin miners discovered they could use graphical processing units (GPUs), typically used for video processing and computer games, to mine Bitcoin. Multiple GPUs could be installed in a machine, and they would mine Bitcoin faster than CPUs had.

As Bitcoin got more popular and mining got more difficult, GPU mining eventually gave way to ASIC (Application specific integrated circuits) mining. ASIC rigs are purpose built to mine Bitcoin, and provide the fastest computational power possible for the lowest consumption of energy.

Now, the difficulty of mining has far surpassed the capabilities of CPUs and GPUs. Although they can technically do it, the speed at which they operate is too slow, meaning someone else will mine the next block first, and the energy cost to do so would be prohibitive. To mine Bitcoin, an operation needs ASIC miners, and plenty of them.

ASIC technology is progressing all the time, with hardware getting faster, more efficient, and less energy intensive to run. Modern mining operations run top of the line ASIC rigs, which can be a big investment up front, but gives them the most powerful systems to mine blocks with for the most efficient energy usage.

It’s a huge step forward when compared to the early days of Bitcoin when anyone could mine from their dorm room, but the Bitcoin industry has demanded that level of progress from miners and mining equipment.

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