Mining Cryptocurrencies
1. What is mining?
Once you have made up your mind about owning cryptocurrencies, you have two options to get it. First, you can buy them or second, you can acquire them by ‘mining[1]’. The latter is explained as follows.
When a cryptocurrency transaction is completed, it must be verified before being added to the block-chain. For this, the hash of the block containing this transaction and several others is calculated. It is required of the block that its hash value must be lower than a ‘target value’. This target value refreshes periodically for a fixed number of blocks.
After the hash is calculated, the network checks that the hash is compliant with the consensus rules[2]. If 51 % of the network agrees with it i.e. the majority, the block is added to the chain. In return, for their efforts, the ‘miners’ who calculated the hash are rewarded with the cryptocurrency. The miners can be individuals or a group of individuals. It is worth noting that, there is no third party entity to verify the calculated hash. The network is responsible for it on a peer-to-peer basis.
2. How to mine Bitcoins?
Bitcoins have been around us since 2009 supposedly created under the name of Satoshi Nakamoto. The total number of bitcoins has been capped at 21 million[3]. With the bitcoin gaining mainstream popularity, nearly 16.8 million bitcoins have been mined. Let us see how. Broadly, there are two ways of mining bitcoins.
2.1 Internet-based:
Website based mining – Anyone who has browsed the web for a long knows the anxiety of random ads, popping up & interrupting the user from time to time. Their solution? Ad-blockers most of which are available free of cost. Even these are getting lucrative by the day. The Brave browser attempts that while behaving like an ad-blocker. If however, the user wishes to view these ads, Brave[4] rewards in return with fractions of bitcoins.
Be advised that not all websites are open about their rewards. Certain websites[5] run a programmed script written in JavaScript for as long as the visitor is on the webpage and mines for cryptocurrencies using its visitors’ resources. A process called crypto jacking.
The popular torrent website, The Pirate Bay has been involved in such incidents[6]
Cloud Mining – Cloud computing eliminates the need to have the hardware to do your job. Along the same lines, cloud-mining keeps all the hassles that a miner would go through, at bay. Concerns like investing in costly equipment, their maintenance, higher electricity requirements etc. are taken care of by providing these services virtually. Genesis Mining & HashFlare are popular cloud mining service[7] providers amongst others. Though easier, cloud mining has a history of being involved in frauds. So it comes with a trade-off between trust and reward.
Pool based mining – This becomes a go-to solution for those who cannot or do not want to invest in expensive hardware mining software. When you join a pool, you contribute your resources, mine for the cryptocurrencies as a whole and rewarded proportionately.
2.2 Hardware-based:
This is the most important component of mining. Based on the purpose with which one ventures into cryptocurrency mining whether a hobby or to make serious money, the required hardware change.
In addition, installing correct software based on the operating system is a major pre-requisite. A software built for a Windows operating system, will not work properly on a Linux system. For optimum performance, using correct software is key. The reason being, some software are designed to work with particular hardware. We will see some of the popular hardware that is widely used subsequently. Sellers often accept cryptocurrency in return as payment.
Users who have a small budget may have a mining facility or a mining rig as per their convenience while those with deeper pockets go on to have a scaled mining rig or a mining farm.
A simple mining rig that can be set up at your home is shown below. The blue fans sure look fancy.
3. Evolution of Mining Hardware
The hardware used for mining bitcoins or any cryptocurrency was not always as appealing as we saw in the previous section. It too, has evolved over the years.
3.1 CPU (Central Processing Unit) Mining – CPUs more commonly known as the ‘brain’ of the computer, were used for mining with advent of bitcoin, and cryptocurrencies. Now the problems with using a CPU were many fuelled by the fact that no alternates existed at the time. CPUs were designed to make decisions rapidly, switch between tasks in no time. For this, CPUs had Arithmetic Logical Units (ALUs).
In addition, mining bitcoins using CPUs required years, yes years of time and a lot of power. Both factors tremendously hindering the profitability of mining with this approach.
Hence, a more efficient solution was required. One that would still prove to be profitable.
3.2 GPU (Graphical Processing Unit) Mining – GPU mining provided a better[8] overall solution to bitcoin mining when compared with CPU Mining. GPUs are utilised for videos editing or in gaming systems that require high quality video graphics. GPUs are designed to carry out repetitive tasks with minimal decision-making. It also has a far greater number of ALUs when compared to those that are available on the motherboard of a CPU.
Solving a hash is laborious and repetitive process. Both these factors play in favour of GPUs. Hence, with the right software, mining using a GPU is more profitable and energy efficient than a CPU.
3.3 FPGA (Field Programmable Gate Array) Mining – FGPAs are a piece of technology[9] that are made without setting their end goals in mind. This freedom resides with its owner. Using a dedicated programming language called a hardware description language, FGPAs can be ‘told’ what they should do. Being inherently programmable, by tweaking the code the functionality can improve the overall performance of the device. This way not only will FGPA last longer than its predecessors but also reduces maintenance. With a hashrate in the range of 100 – 850 MH/s, it made GPU mining obsolete.
3.4 ASIC (Application Specific Integrated Circuit) Mining – ASICs are the leading mining hardware that are being employed for mining. Functionally these are similar to FGPAs but are superior to FGPAs because of their higher hash rates[10]. A parameter that tells allows you to estimate how many hashes can be solved in a second.
Hash rates for ASICs lie in the Giga hash range while most FGPAs operate in the Mega hash range. A more thorough comparison can be found here[11].
4. ASIC HARDWARE
ASIC hardware is used not only for mining, but also across the electronics industry. It is programmable specifically for a particular purpose using hardware description language like Verilog/VHDL just an FGPA hardware. So why use ASIC hardware? It is far superior, in terms of speed that is the hashrate and efficiency as compared to FGPA mining hardware.
The only downside that ASIC hardware poses is its cost. ASIC miners cost anywhere from $2,500 to $5,000 apiece[12]. In addition, there is a correlation between speed of mining, its efficiency and heat generated. Any two favourable parameters cause a drop in the third one and hence a cooling system is also required.
5. FINDING THE RIGHT ASIC HARDWARE
Now that you know, ASIC hardware are the most superior mining hardware available for mining, choosing the right ASIC hardware is very important. Here are seven pointers to keep in mind before investing in ASIC hardware.
1. Budget – The first and basic requirement is to think about how much you afford to pay upfront. This should include everything from cost of your hardware, software that it will run on, cost of electricity, daily duration of mining and cooling systems used.
2. Purpose – Understand and realise the purpose with which you want to mine cryptocurrencies. Is it a passing phase of interest or as a hobby or are you seriously looking to make money?
3. Cryptocurrency – There are more than 1500 cryptocurrencies[13] in the digital market! Which one are you going to pick and on what basis? What is its current value? How is it likely to fare in the months or even years to come? How much are you expecting to make out of your choice?
4. Overall operating Costs – Perhaps the most significant factor that will control your profitability. No doubt, mining cryptocurrencies is a costly affair. So to be profitable, it is required that the hardware be run continuously. Meaning, a lot of power consumption.
Geographically, are you located in a country with cheap power or near a power-generating source like power plants? Mining companies like HIVE Blockchain Technologies Ltd, Genesis Mining Ltd, and BitFury Group have been set up in Iceland to cut down expenses[14] on cooling systems.
The purpose with which you are going to mine, will dictate your choice of hardware. Based on that, you may require a cooling system to dissipate the heat generated by your mining hardware, which has the potential to damage the hardware. Hence, this will add to cost of your equipment’s and therefore, to the overall operating costs.
Lastly, using the correct software for the hardware optimises the hardware’s performance. Meaning, maximum and best utilisation of your resources. Not as significant as the cost of your equipment or power consumption but still a contributor to the operating costs.
5. Mining Duration – Depending on your location, you may face frequent power-cuts or be using costly electricity. Both affecting the duration for which you are able to run the equipment.
6. Maintenance – Buying the fastest and most efficient hardware will definitely push your mined corpus. However, you are also required to scrap the obsolete equipment. The way ASIC hardware has grabbed the attention of the crypto-community(s) stealing the spotlight from its ancestors.
7. Profitability – The six factors listed above govern your profitability. If you are planning to mine cryptocurrency on a more casual basis, perhaps it is better to avoid investing in costly hardware. The alternate option being trading. Others understand that mining is a costly affair and requires a high investment, upfront. Apart from money, it will also require time and patience maybe even years, before you break even.
Once you have done your homework and have answers to these pointers, let us look at the top ASIC hardware that are available in the market today.
6. TOP 10 ASIC HARDWARE FOR MINING
Finally coming to the end of this guide.Based on speed of generating hashes, efficiency of utilising power and cost of the hardware, here is a list of the top ten ASIC mining hardware[15]. This should help you make a decision about which hardware would suit your needs. A couple of trends to keep in mind before that –
1. Increased hash rate (Hashes per second or H/s) comes at a higher price. It however, at the end of the day, fetches a greater reward in terms of mined cryptocurrency,
2. Lower efficiency rating (Joules per GigaHash or J/GH) implies better utilisation of power. To understand this better consider two efficiency ratings. Let us say rating A at 0.1 J/GH and rating B at 0.2 J/GH. For the same hashes to be generated i.e. one GigaHash, a device with rating B will require twice as much energy against one rating A. This means that you electricity consumed will be proportionately lesser if the efficiency of your device is rated lower.
So understand that there is no best device to use for mining cryptocurrencies and hence, there will be a trade-off between price, efficiency and speed.
1. Antminer S9 - This is the latest[16] product put in the market made by Bitmain. It proudly broadcasts an average speed of 14 TH/s and an efficiency of 0.098J/GH. Its size goes 35cm x 16cm x 13.5cm approximately and has a fan on each end to ventilate the heat generated inside, a requirement common to all miners. The temperatures on the chip can reach about 80 degrees Celsius, which is where the fans are utilised. By keeping the temperature at lower levels, the fans ensure that the miner runs more efficiently. The front fan is designed to run at 6000rpm while the rear fan runs at 4300 rpm.
Do not be fooled by its size. Though it does not occupy a lot of space, the noise that it creates will keep you from using it inside your homes. For the greater good, it is best if installed in a garage or out of your home[17].
The hardware is easy to set up as it comes with an instruction manual. What is disappointing and also smartly done by Bitmain is that the power supply cord and box are sold separately. Lastly, the current batches of S9 miners are covered under a 90-day warranty period. This will be extended to a 180-day period for the batches shipped in September’18.
Final Verdict : Price 5/5 Speed 5/5 Power efficiency 4.5/5
2. Antminer T9 – The successor to the Antminer S9, the Antminer T9[18] is designed to mine cryptocurrencies using the SHA-256 algorithm. Offered by Bitmain, the T9 operates at a higher voltage using modified high-quality ASIC chips. Making it more reliable than the Antminer S9. This means that lesser time efforts and money needs to be spent for maintaining the product. Not only is it more reliable but also, cheaper[19] when compared with the S9. It does require a power supply unit that is sold separately which adds to the overall cost.
However, the latter still beats the former in terms of speed and efficiency. Two factors that govern the net profitability. The Antminer T9 clocks speeds of 10.5 – 11 TH/s with an efficiency of 0.126J/GH. The corresponding values for the S9 (in the early batches) being 13.5 TH/s and 0.098J/GH. Owing to its lower efficiency, it consumes more power than S9.
Owners will be pleased with the 180-day warranty that Bitmain offers with the T9[20].
Final Verdict: Price 4/5 Speed 4/5 Power efficiency 3.5/5
3. Antminer S7 – The predecessor to Antminer S9 and another great product by Bitmain. For its time i.e. before the arrival of the S9, the Antminer S7 was a top performer with a hashing rate of nearly 4.7 TH/s and an efficiency of 0.25 J/GH. Since it has been succeeded by the likes of S9 and T9, the S7 is available at a much lower price[21].
The biggest question that remains is its profitability[22]. This piece of tech is more suitable for hobbyists. For serious miners, it is recommended that they invest into a better hardware.
Final Verdict: Price 3.5/5 Speed 3/5 Power efficiency 3/5
4. Avalon 721 – More commonly known as Avalon 7, it costs a little more than $1,600 that is atleast a $1,000 cheaper[23] than the Antminer S9 on Amazon. The price however varies from seller to seller. This should be treated with a pinch of salt, as the quality of the product must not be compromised. For its operation, it requires a controller and power supply unit, which are sold separately.
Canaan offers a 90-day warranty for this product starting from the day it has been received by the user. The Avalon 7 can be used to mine[24] any cryptocurrency that uses SHA-256 algorithm at 6 TH/s against an efficiency[25] in the range of 0.16-0.17 J/GH. In addition mining with this device also makes lesser noise in comparison to Antminer S7 and Antminer S9. Overall it is a great product for someone with a smaller capital who is looking for value. In terms of stability and reliability Canaan’s products have beaten Bitmain who have had some issues with their products.
Final Verdict : Price 3/5 Speed 3.5/5 Power efficiency 3.5/5
5. Avalon 741 – The Avalon 741 is 721’s successor. The key highlights[26] of this product being more ASIC chips 88 than 72 in case of 721. More chips meaning a better speed and with a higher speed comes more heat generation. Both situations have been cleverly addressed by Canaan. The 741 comes with an improved[27] hashrate of 7.3 TH/s from 6 TH/s and to combat the heating issue, a new Airform cooling system has been introduced. Canaan has tried to ensure[28] that the upgrades do not affect the existing levels of noise. However, the 741 does bring a few decibels along with the upgrades. The Avalon 741 also comes with the same terms of warranty[29] and efficiency[30] as the 721.
Final Verdict: Price 3.25/5 Speed 3.75/5 Power efficiency 3.5/5
6. Avalon 761 – Canaan has taken the Avalon 7 series a step further by introducing[31] the Avalon 761. This device comes with an improved hash rate from 7.3 TH/s to 8.8 TH/s. Apart from the hashrate, the efficiency has also increased by a bit from 0.16-0.17 J/GH to 0.15 J/GH. Just like its Avalon 7 peers[32], Canaan has done a fine job to contain the noise between 50-60 decibels and also provided the airforming cooling technology in it.
Final Verdict: Price 3.25/5 Speed 4/5 Power efficiency 3.75/5
7. Avalon 821 – This is the closest competitor to the Antminer S9 in the mining market till date. To this device, Canaan[33] has given the best hash rate that we have seen so far among its peers. At roughly 11 TH/s with a rated efficiency of 0.109J/GH and much lesser power consumption of 1200W, it mines bitcoins using the SHA-256 algorithm. To keep its interiors cool Canaan has incorporated airforming cooling technology in it. With this product[34], Canaan has yet again demonstrated that its focus still lies on reliability over anything else. It is covered under a 90-day warranty once received, just like its predecessors.
Along the same lines, it too requires a controller, which is sold separately. However, the exciting part about buying the controller is that a maximum of 20 miners can be clubbed together[35] to give you a whopping 220 TH/s of mining speed. That apart the Canaan has shown generosity by providing the power supply unit with the device which otherwise had to be separately. Thanks Canaan!
BlokForge[36] one of the official suppliers of the Avalon 821 has listed this device at $2,899. When compared to the Antminer S9 the price point is going to be the deciding factor. This is because what Avalon 821 lacks in speed and efficiency can be potentially compensated using cheap electricity owing to its lower power consumption rating.
Final Verdict: Price 4/5 Speed 4/5 Power efficiency 4/5
8. Whatsminer M3 – A surprise entry in the ASIC mining hardware market. The United States of America based company[37], Whatsminer, sells this device. It has the capability to mine Bitcoins or Bitcoin Cash. With an eyebrow-raising mining speed rated between 11-12 TH/s, a power consumption rating of 2000W and decent efficiency of 0.174 J/GH, it is sure to provide a good competition to its peers. At the first glance these specs may not excite you but understand that this miner has been built using an older version of 28 nm ASIC chips while its peers have already moved to 16 nm chips. It gets better[38]. Whatsminer offers a controller along with the miner unlike its peers who like to sell this separately.
Though tagged out of stock as listed on their official website, do stay tuned for upcoming products as this company has a great potential to make some noise.
Final Verdict: Price 3.5/5 Speed 4.5/5 Power efficiency 3.5/5
9. Dragonmint 16T – In an attempt to decentralise Bitcoin mining, Halong Mining[39] have come up with the Dragonmint 16 T. Halong claims[40] that this will be the world’s most efficient mining hardware with an efficiency rating at 0.075J/GH. Even better than the Antminer S9. But wait, there’s more. Halong also claims that the Dragonmint 16T has a hash rate of 16 TH/s and consumes about 1200W. These are staggering figures against the S9’s 14 TH/s at 1370W. Just when you thought that this is surely going to be expensive, let me tell you it is not. Not atleast as the S9. It is priced cheaper than it in fact.
If all this were true, Halong could[41] potentially[42] dethrone Bitmain in the mining market. Here are some of the shadier areas of this product. Though reasonably priced, a minimum of five units must be ordered which amounts to a $10,000 investment, power supply units being sold separately. The company is open only for pre-orders. Meaning, that this product is not out in the market yet and most of enquiries about it have not turned out to be fruitful. Halong does not have a satisfactory customer support system and do not permit factory visits or undertake bulk orders, which would translate to million dollar deals.
These factors[43] have caused the users to form a negative opinion about the Dragonmint 16T. While some others also believe that, this is a fraud. The product is expected[44] to be released in March 2018. So until then, refrain from placing pre-orders. However, if the product does fall through, it is sure to generate great returns.
Final Verdict: Price 2.5/5 Speed 5/5 Power efficiency 5/5
10. Antminer R4 – Clearly, mining is not for everyone and especially not for household. Or is it? Once again, Bitmain has attempted and solved this scenario. With the Antminer R4, Bitmain attempts[45] to restore mining at home for hobbyists and beginners. Its cooling system has been inspired from silent air conditioning. Because of it, the fans run very slowly which in turn keeps the noise at controlled levels.
By maintaining the noise levels at 52 Decibels i.e. the noise of a normal conversation at your home, Bitmain has solved[46] the problem of noisy miners. You no longer require relocating the mining equipment or looking for isolated areas where you can set up your mining rig. At 8.6 TH/s and an efficiency that matches the Antminer S9’s 0.098 – 0.1 J/GH this is quite[47] a miner.
The R4 was advertised at a price of about $1,100[48] and an additional $240 for a power supply unit. Yes, if you thought that Bitmain sells this separately, you are right. However, it is hard[49] to get your hands on this today for the price advertised. This product is no longer available on Amazon or Bitmain’s official website. It can be brought from popular e-commerce website EBay but at the cost of credibility.
Final Verdict: Price 2.75/5 Speed 3.5/5 Power efficiency 5/5
So there you have it. With this list, you should be able to gauge the kind of products out there and make a decision about which product is best suited for your needs. Wish you all the luck!
References :
[1] https://bitcoinmagazine.com/guides/what-bitcoin-mining/
[2] https://www.mycryptopedia.com/what-is-cryptocurrency-mining/
[3] https://blockchain.info/charts/total-bitcoins
[5] https://99bitcoins.com/webmining-monetize-your-website-through-user-browsers/
[6]https://cryptocoin.news/news/mining/the-pirate-bay-implements-another-cryptocurrency-mining-code-2824/
[7] https://www.bitcoinmining.com/best-bitcoin-cloud-mining-contract-reviews/
[8] https://en.bitcoin.it/wiki/Why_a_GPU_mines_faster_than_a_CPU
[9] https://cryptojunction.com/glossary/fpga-mining/
[10] https://www.youtube.com/watch?v=prt4X0VocEU
[11] https://en.bitcoin.it/wiki/Mining_hardware_comparison
[12]https://www.amazon.com/s/ref=sr_st_price-desc-rank?keywords=antminer&rh=i%3Aaps%2Ck%3Aantminer&qid=1518346960&sort=price-desc-rank
[13] https://coinmarketcap.com/
[14] https://www.accountsandlegal.co.uk/small-business-advice/energy-consumed-in-mining-bitcoin-would-power-a-quarter-of-uk-s-25-million-homes
[15] https://www.buybitcoinworldwide.com/mining/hardware/
[16] https://shop.bitmain.com/specifications.htm?name=antminer_s9_asic_bitcoin_miner
[17] https://www.youtube.com/watch?v=ryInEJaiAHw
[18] https://99bitcoins.com/review-antminer-t9-vs-s9-bitcoin-miner/
[19]https://www.amazon.com/AntMiner-T9-10-5TH-0-136W-Bitcoin/dp/B079G8LH46/ref=sr_1_1_sspa?s=electronics&ie=UTF8&qid=1519231926&sr=1-1-spons&keywords=Antminer+t9&psc=1
[20] https://www.disruptordaily.com/t9-antminer-review-10-things-know-2017/
[21]https://www.amazon.com/Antminer-4-73TH-Fans-Bitcoin-Miner/dp/B014OGCP6W/ref=cm_cr_arp_d_product_top?ie=UTF8
[22] https://www.buybitcoinworldwide.com/mining/hardware/antminer-s7/
[23] https://99bitcoins.com/bitcoin-miner-review-the-avalon-7-avalonminer-721-is-it-worth-it/
[24] https://asicminermarket.com/product/bitcoin-miner-avalon-721-6th-asic-miner-6000gh/
[25] https://asicnews.com/asic-miners/can-avalon-721-dethrone-antminer-s9-as-a-more-efficient-asic-miner/
[26] https://bitcoinprosper.co.za/product/avalon-741/
[27] https://www.amazon.com/AvalonMiner-741-7-3-TH-s/dp/B0732HK63V
[28] https://asicnews.com/asic-miners/top-6-best-bitcoin-asic-miners-2017/
[29] https://asicminermarket.com/product/bitcoin-miner-avalon-741-7-3th-asic-miner-7300gh/
[30] https://bitcointalk.org/index.php?topic=2588105.0
[31] https://www.techradar.com/news/best-asic-devices-for-bitcoin-mining-in-2018
[32] https://www.cryptocompare.com/mining/canaan-creative/avalonminer-761/
[33] https://canaan.io/product/avalonminer-821/
[34] https://bitcointalk.to/index.php?topic=2937129
[35] https://bitcoinprosper.co.za/product/avalon-821/
[36] https://www.blokforge.com/product/avalon-821/
[37] https://whatsminer.net/index.php/product/m3-11-5-12-5-ths-whatsminer-220v-psu-pre-order-ships-feb-2-feb-28-2018/
[38] https://bitcointalk.org/index.php?topic=2390138.0
[39] https://halongmining.com/
[40] https://www.cryptocompare.com/mining/halong-mining/dragonmint-16t/
[41]https://www.reddit.com/r/Bitcoin/comments/7f1nau/has_anyone_bought_the_dragonmint_16t_looking_for/
[42] https://asicnews.com/news/halong-mining-dragonmint-16t/
[43] https://news.bitcoin.com/the-curious-case-of-the-new-dragonmint-bitcoin-miner/
[44] https://www.crypto-news.net/dragonmint-16t-miner-announced-and-available-for-pre-order/
[45] https://99bitcoins.com/bitmain-antminer-r4-review-mine-bitcoins-home/
[46] https://www.buybitcoinworldwide.com/mining/hardware/antminer-r4/
[47]https://shop.bitmain.com/antminer_r4_silent_bitcoin_miner_for_home.htm?flag=specifications
[48]https://www.amazon.com/Bitmain-Antminer-8-7TH-Quiet-Bitcoin/dp/B01L7QNO5I/ref=cm_cr_arp_d_product_top?ie=UTF8
[49] https://1stminingrig.com/antminer-r4-review-home-bitcoin-mining-back/