What Is A Mining Rig and How Have They Evolved?

For those new to the cryptocurrency market, it may be unclear what cryptocurrency mining really is. The name can be misleading, but the gist is that miners harvest cryptocurrency by being the first to solve a complex mathematical puzzle called “hashing”. Mining is the most notable way (at this time) to consistently make money on “proof-of-work” models of mining cryptocurrency, through which Bitcoin and Ethereum, the most popular tokens, utilize.

A “proof-of-work” blockchain tasks the collective group of individuals in a coin’s environment to use computing power to validate and transcribe each transaction to a block. Without peer validation for each transaction, nothing would prevent token owners from “double-spending” their digital currencies.

It’s easiest to think of a blockchain as a public digital ledger, which hosts all the transactions that occur between coin owners in real-time. When one block is complete and a new block begins, it’s synonymous with turning one page of the ledger and moving to the next.

Mining creates an incentive for peers to donate their time (and computing power) to validate transactions and transcribe them to a block. The first miner to complete a block and create the new one is awarded newly minted currency. The amount a miner wins and how fast each puzzle is solved depends on which currency is being mined.

Mining used to be available to anyone with a computer but has quickly become so competitive and mature that certain currencies aren’t economically viable to the general public.

  CPU rigs  

Bitcoin was the first cryptocurrency to gain significant market traction, so unsurprisingly, the different generations of mining rigs are tethered to Bitcoin’s evolution. In 2009, Bitcoin was available to anyone who owned a computer. The first mining software was shockingly basic and allowed individuals with the most computing power to obtain new Bitcoin. Similar to algorithms across all proof-of-work cryptocurrencies, the SHA-256 that powers Bitcoin to this day, adjusts the difficulty of its puzzle based on the average computing power used by miners. When Bitcoin began to grow in popularity and price, so did the desire for more competitive computing power.

GPU rigs

In 2010, Bitcoin mining software was released for graphical processing units (GPUs), the technology found in high-performance gaming computers. Since GPUs are meant to handle more graphically-intensive applications like video games or video editing that CPUs can’t, they churn out more processing power than a CPU.

The operational differences between CPUs and GPUs are analogous to the work of executives, a small group of individuals delegating workload, and employees, a large group with a specific job to perform well for long periods of time. The GPU is performing the more intensive labor, and has a far more powerful Arithmetic Logic Unit (ALU) than a CPU, making it a better fit for mathematically intensive applications like mining.

The growth of GPU-based rigs fundamentally changed the early mining operations. When miners wanted to scale their success with single-unit GPU mining rigs, they were required to find cost-effective ways to link multiple GPUs to reduce chip costs and promote inexpensive high-efficiency power supplies. As a result of this scaling, miners now had to take their operations to an offsite location, like a data center or a warehouse, to manage the power and cooling requirements necessary to keep overhead costs down.

  FPGAs

When GPU mining became far too competitive, the next generation of hardware, FPGA (Field-programmable Gate Array), was introduced to the market by Butterfly Labs in 2011. The FPGAs were specially made for mining, able to drastically improve hash rates in a smaller footprint. Unlike previous rigs, there was a learning curve for FPGAs that required both core competencies like programming languages and FPGA-specific tools. This mining rig enjoyed success for a very short period simply because a better rig was created to replace it.

  ASICs

An application-specific integrated circuit (ASIC) was introduced to the market by Butterfly Labs only a year after they unveiled the FPGA rig, rendering the FPGA rig obsolete. Since ASICs were developed with mining as their sole application, they were able to produce more computing power for mining and with lower power and cooling costs. As of today, ASICs are one of the only ways to mine bitcoin at an affordable cost, even with the price of the coin surging to above $11,000. The competition between the many different companies that developed ASICs between 2012 and 2017 yielded multiple generations of these rigs before reaching the mining hardware used today, like Anitmeter S9 and Avalon6.

The catalyst for mining rig evolution is the same as any other market - competition and the need to maximize ROI. In the case of mining, it’s balancing the computing power to acquire large amounts of a coin, while minimizing the power and cooling requirements and costs. While Bitcoin mining for newcomers is not recommended, as it is wildly unprofitable outside of elite players or mining companies, there are other coins that purposefully hinder the effects of ASICs. Etherium’s Ethash algorithm, for example, favors memory-based processing for validating the token transactions, which GPUs have more of than ASICs. 

Our next blog post will offer recommendations for those who are new to mining but want to get started.