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Cryptocurrency Mining Hardware Overview

September 02, 2020

Cryptocurrency Mining Hardware Overview

Here, you’ll find basic explanations of 4 types of hardware used to mine cryptocurrencies. This post is intended to be a quick reference for those new to mining. It does not provide reviews on any specific miners or hardware providers. It also does not provide recommendations on which cryptocurrencies to mine and/or opinions if mining is worth it.

Are you relatively new to crypto? Are you sort of familiar with mining but you’re still not sure who or what “miners” are? If yes, then let this piece serve as a modest, basic introduction.

TL;DR

  • Generally, there are 4 types of hardware to mine cryptocurrencies:
  • CPUs are the least powerful and they are very general purpose. Things like your laptop and phone run on CPUs.
  • GPUs are more powerful than CPUs because they are meant to process graphics such as videos and video games.
  • FPGAs are like a mix between CPUs and GPUs. They’re like CPUs in that they’re general purpose because they can be programmed to run different types of software. They’re like GPUs in that they’re powerful.
  • ASICs are like a mix between GPUs and FPGAs. They’re like GPUs in that they’re for a specific purpose. They’re like FPGAs in that they’re extremely powerful.

Mining: A Very Brief Overview

If you’ve heard of mining cryptocurrencies, you’ve probably heard a definition along the lines of, mining is the process through which transactions are verified and recorded on a distributed ledger in order to maintain consensus and security on a decentralized network. If you’re like most beginners, you’re probably like WTF does that mean?! And who the heck are miners?!

Since this post is about mining hardware, however, it assumes you have a basic understanding of what mining is. If not or if you need a refresher, read the next paragraph. If you’re still scratching your head, check out this video from 99Bitcoins.

In short, miners are a bunch of computers connected to a cryptocurrency network. Their job is to track all the transactions on the network’s history. All the computers can see the history and this helps to make sure no single computer or group of computers try to change it. The miners race against each other to “write the next chapter of history”, which is a way of saying to add the next “block” of transactions. Whichever miner wins the race, gets rewarded in cryptocurrencies.

In other words, miners’ main purpose is to track, validate, and record transactions publicly, in order to make sure people can trust the network. Whichever miner does this the best and fastest, gets rewarded. Cryptocurrencies are the reward for, not the purpose of, mining.

Tracking the history of transactions takes a memory. It also takes processing power to add the next set of transactions to the network. The amount of memory and number of transactions corresponds with the computing power required by miners.

4 Types of Mining Hardware

Generally, there are 4 types of hardware that can be used to mine cryptocurrencies:

  • CPU. Central Processing Unit. This is what your average desktop or laptop computer uses. You can think about a CPU as an all-purpose mission control. It executes all the software running on your computer. In other words, it interprets the code that runs applications like your web browser or word processor, and interprets it in a way that you, the human, can understand and interact with.
  • GPU. Graphics Processing Unit. GPUs have a more specialized purpose than CPUs do; GPUs are meant specifically to process graphics data, such as images and video. That’s because things like video take more processing power than simpler applications such as word processors. GPUs are especially prevalent in the world of video games, which tend to be extremely graphic-intensive. If you’ve ever experienced pixelated images and/or slow buffer speeds while watching a video saved on your computer, that probably means your computer’s GPUs were insufficient.
  • FPGA. Field-Programmable Gate Array. FPGAs are sort of like “if-this-then-that” decision trees on steroids. As the name implies, the user is able to program FPGAs for specific purposes using complex logic. They’re used in all sorts of ways from helping airplanes navigate to performing ultrasounds. This flexibility is one of the reasons FPGAs are so appealing. In other words, the same piece of hardware can be programmed to do many different things.
  • ASIC. Application-Specific Integrated Circuit. ASICs are similar to FPGAs in that they’re like “if-this-then-that” decision trees on steroids. But ASICs are more like if those trees were also on steroids. That’s because ASICs are intended for a particular use. That means that the hardware itself (i.e., the circuit) is designed to run software for a specific application. One helpful way to think about it is that a FPGA is a generalist, while an ASIC is a specialist.

If you’re interested in the specifics, check out these Wikipedia pages: CPU, GPU, FPGA, ASIC.

How This Relates to Mining Cryptocurrencies

Cryptocurrency networks, such as bitcoin, have a long history and lots of transactions. That translates to lots of memory and lots of processing power. That means miners need to be powerful computers.

The way that bitcoin and cryptocurrency networks are designed, the more miners on the network, the more computing power required for mining. This mechanism ensures that a single miner and/or group of miners can’t hack the system and rewrite the transaction history.

In bitcoin’s early days, people could use their laptops as miners, mining bitcoins using simple CPUs. As more people started mining, however, the more computing power it took to mine new bitcoins. So, miners started to shift from CPUs > GPUs > FPGAs > ASICs.

Nowadays, ASIC miners dominate the bitcoin network. That’s because these computers are built with the sole purpose of mining bitcoin.

FPGA, on the other hand, are still powerful and can be programmed to mine different types of cryptocurrencies.