The past couple of years have been big for cryptocurrency, and if 2021 was any indication, that’s a trend that will undoubtedly continue in 2022. Despite the recent turn to a bear market, cryptocurrency is rapidly becoming more mainstream by the day. The cryptocurrency market has surged so much that its total value is now nearly $2.5 trillion—rivaling even the most valuable company in the world, Apple. From increasing interest from retail traders to El Salvador officially recognizing Bitcoin as legal tender, crypto isn’t going away anytime soon; it’s simply become too big to ignore.
Understandably, as interest in the crypto market grows, so does the interest in crypto mining. To help you get a grasp on this complex topic, here’s a look at what crypto mining is, how it’s changed, and some of the most important things you should know when it comes to mining rigs.
What Is Crypto Mining?
What do you think of when you hear the term “crypto mining?” If you’re like most people, you probably think it’s just a way to mint new coins and introduce them to the market. Although this is the end result, crypto mining also involves the process of validating cryptocurrency transactions on the blockchain network and adding them to a digital ledger. This ensures digital currencies are accounted for and aren’t being double-spent on the network. Just like with physical currencies, the digital ledger must be updated every time a coin is minted or spent.
To do this, miners use a computer or several computers to “solve” cryptographic equations and record that data to a blockchain. Although commonly referred to as “solving”, it’s essentially a matter of guesswork as the computer attempts to find a 64-digit hexadecimal number (called a hash) that’s less than or equal to the target hash. This process (known as Proof of Work or PoW) is intensive and requires a fast, high-end system.
To incentivize miners to help secure the network, the first miner to crack the equation receives newly generated coins and transaction fees from all the transactions included in the block. The more computing power a miner’s computer has, the more competitive they can be at mining. To mine successfully, computers need to have a high hash rate, which is measured in terms of gigahashes per second (GH/s) and terahashes per second (TH/s).
Crypto Mining Through the Years: CPU, GPU, and ASIC Miners
The profitability of crypto mining is based on how quickly a computer can guess the right answer before another miner’s system, which has everything to do with how quickly a computer can produce hashes.
In January 2009, Satoshi Nakamoto (the author of Bitcoin’s whitepaper) mined the first Bitcoin block. At the time, Nakamoto didn’t need specialized equipment; all he needed was an average PC with a central processing unit (CPU).
In the early days, the computational energy required to create new blocks and earn mining rewards was minimal. However, as the algorithms became increasingly complex, CPU mining began to take longer to discover transactions on the cryptocurrency’s network. By 2015, some experts say the difficulty level of crypto algorithms had become so complex that it would take CPUs an average of “several thousand years” to find a valid block. In addition, CPU mining comes with high electrical and cooling costs.
As an alternative, miners turned to graphics cards, also known as graphics processing units (GPUs), which can mine crypto faster and more efficiently than CPUs. GPUs are specifically designed to render 3D graphics and shapes; to do this, GPUs compute a large number of complex mathematical calculations at once. For example, if you’re playing an open-world video game like Assassin’s Creed Valhalla, the GPU has to render the entire game world (including shading, lighting, and shadows) as well as the character models, weapons, and game physics—all at the same time.
Since GPUs excel at handling a massive number of calculations, they’re an ideal choice for crypto mining, where they can quickly brute force the complex equations needed to calculate mining hashes. Another benefit is that GPUs offer a much higher processing power than CPUs—in some cases, as much as 800x more. In addition, they use less energy, have lower maintenance requirements, and unlike CPUs (which can overheat and crash once the system starts to work harder) GPUs allow you to continue mining seamlessly. Although a GPU system is a larger investment, it comes with a higher hash rate, which is ideal for mining Bitcoin, Ethereum, Monero, Cardano, and other types of coins.
Another type of crypto mining system is called an ASIC miner. These are custom-designed, dedicated mining systems equipped with specialized chips that allow for faster and more efficient mining. Generally, each ASCI miner is designed to mine a specific type of currency. In recent years, many cryptocurrency enthusiasts have also come to rely on “mining pools”. This involves a group of people pooling their mining resources together in order to enhance their processing power and improve their mining output.
A typical mining rig will contain the following components:
- Motherboard
- Graphics card (GPU)
- Power supply
- Cooling system
- CPU
- Frame
And if you’ve been considering a mining rig, Tech Shack can help you build one to your exact specifications! Be as hands-on—or hands-off—as you want. Whether you’d like to choose each part yourself or let us handle the design, we make it easy to have the system you’ve been dreaming of.
Why it’s Important to Maintain Your Mining Rig
When it comes to crypto mining, most people’s focus is on the potential profits. One of the best ways to keep your mining as profitable as possible is to keep your mining rig in good condition.
We know—once you start mining, it can be difficult to turn your rig off! But there are a few reasons why you should from time to time, and dust removal is one of them. When dust collects on the components, it creates a layer of insulation that makes it harder for heat to escape. Over time, this can cause the operating temperatures of critical components, like the GPU, to increase, which can lead to overheating or permanent damage. Dust can also block the rig’s airflow, which again, traps heat that can damage the system. Likewise, having working fans is essential to keep air flowing properly and to prevent overheating.
Other things that can cause system failure during intensive computing include mismanaged overclocking and outdated drivers. In general, it’s a good idea to do a quick inspection of your rig every month or two. Check whether you have any software updates, examine your CPU and GPU for dust or damage, and ensure your fans are functioning properly.
Wondering what type of maintenance your rig needs? Schedule a free consultation to discuss what you can do to keep your system well-maintained and performing its best!
Parts Shortages and Price Increases
For many, the problem with mining cryptocurrency is the cost. Although it can be done relatively inexpensively, the competitive nature of mining means that the more computing power you have, the more lucrative your efforts will be. Specifically, you’ll need a GPU or an ASIC for your rig, which brings us to the next issue: parts shortages.
Although the industry has been battling with GPU shortages for years, the problem became more apparent in 2020, as the pandemic brought about supply chain issues and labor shortages. To make matters worse, the pandemic led to more people working from home—and increasing the demand for personal electronic devices that rely on GPUs. As the new set of GPUs hit the market, scalpers used bots to purchase high-demand graphics cards, which they then sold at inflated prices. Although chipmakers and retailers have taken steps to prevent scalpers and miners from buying up the supply, Nvidia execs have said they expect the shortage to continue to be an issue for at least the first half of 2022.
Along with shortages, GPUs have also seen a price hike over the past couple of years. While some of this is related to demand, it’s also partially caused by the 25% tariff added to graphics cards imported from China. The extra costs, which were enacted in 2021, have essentially been passed along to U.S. consumers to offset the higher price of exports. There’s also the matter that next-gen cards use advanced materials and designs, which makes them higher quality and more expensive to manufacture than cards from previous generations.
What does this mean for you? If you’d like to build a custom mining rig, or would like to replace your current GPU, there’s a good chance that you may have to wait for parts to be in stock longer than you would have in the past. Additionally, many cards now feature LHR (Lite Hash Rate) to limit mining speeds and make the cards less desirable to crypto miners. With the current demand and tariffs on China, you can also expect to see higher prices for GPUs.
Start Your Cryptocurrency Mining Adventure with Tech Shack
As an industry, cryptocurrency is relatively new and rapidly developing, which can make it difficult to stay current on the latest trends and technology. Whether you’d ready to dive into the world of crypto with your own mining rig or you’re already a seasoned miner, Tech Shack is here to help with maintenance, repairs, hardware and software upgrades, and custom builds!Visit us in-store or schedule us for an onsite visit! Call Tech Shack at (864) 722-5155 or book an appointment through our convenient online scheduling system. Be sure to mention this blog post for a free consultation (a $35 value) on a mining rig that you’d like to have maintained or upgraded! Offer expires 3/1/2022.