Many investors and traders in traditional financial markets occasionally consider investing in cryptocurrency. For those with experience on exchanges, crypto trading or investing in digital assets merely expands the list of tools they typically work with. However, there are also those who aim not just to trade coins and tokens, but to profit from mining them. For these market participants, choosing the right equipment is crucial. So, how do you choose mining equipment?
From this article you will learn:
- Key differences between using graphics cards (GPUs) and ASIC miners for cryptocurrency mining, including their pros and cons.
- Important criteria such as algorithm compatibility, pool requirements, hash rate, and power consumption when selecting specific mining devices.
- Insights into the profitability calculations and cost considerations to make an informed decision about your mining setup.
What Tools Does A Miner Use
The first thing novice miners need to do is decide on a fundamental question: what to choose:
- Graphics cards (GPUs).
- ASIC miners.
Of course, among new cryptocurrencies, there are those designed for mining using central processors (CPUs), and some algorithms even ensure protection against ASIC implementation. However, we are not talking about these coins and tokens, which are still far from being well-known in the market. We are considering mining such assets that can provide profitability even in a tough market situation and demonstrate high liquidity. For most of these, the choice between graphics cards and ASICs is fundamental.
Graphics Cards
Graphics cards as mining devices have several undeniable advantages. The main one is versatility. The core unit of their architecture is the Graphics Processing Unit (GPU), which is not much different from any processor unit, be it a central processor in a PC or a controller in various devices. This means it can perform almost any program and, if necessary, switch to another.
This is why graphics cards can be used to mine almost any cryptocurrency. The differences between them lie only in the cryptographic algorithms; block searching involves solving computational tasks based on these algorithms. For a GPU, it makes no difference what the program it is executing contains, whether it is mining Bitcoin or an unknown shitcoin.
Among other advantages of using graphics cards for mining:
- Gradual power increase. For example, you can start mining with 1-2 powerful cards, adding new ones over time and increasing the power of one device. After reaching the physical limit, nothing prevents you from gradually assembling new ones. Even a setup based on a single GPU can already generate income.
- High-performance graphics cards are primarily developed not for mining, but for other tasks such as video processing or dynamic graphics in games, making them significantly easier to purchase than specialized devices.
- Selling powerful GPUs used in mining after quitting is also significantly easier. The demand for them, for example from gamers, remains high regardless of the state of the crypto market.
Additionally, since graphics cards are primarily intended for use in home computers, manufacturers address noise and heat dissipation issues along with increasing performance. Therefore, it is much easier to set up cooling and noise reduction systems for GPU miners.
ASIC Miners
These devices are designed and manufactured to perform one specific task. In most cases (there are some exceptions, but they are rare on the market), an ASIC created for Bitcoin mining and implementing the SHA-256 algorithm cannot be used to mine Ethereum Classic using the ETCHash algorithm. However, this specificity also provides an advantage: the chips in these devices are smaller and offer higher performance for the tasks they are designed for.
As a result, one ASIC miner can replace several graphics cards in terms of performance. Additionally, its cost is usually lower than a setup consisting of multiple powerful GPUs. Of course, this means the miner loses flexibility and the ability to switch to mining more profitable cryptocurrencies at a given time (unless they use the algorithm embedded in the ASIC). However, currently, with Bitcoin mining remaining highly profitable compared to most altcoins (yielding at least 25% more), this drawback can be considered negligible.
Moreover, an ASIC miner is a complete device that does not require assembly, installation of additional modules, or software adjustments, unlike when increasing the number of graphics cards used for mining. An ASIC miner simply needs to be connected to electrical and computing networks, and it is ready to start mining.
An ASIC miner costs more than a single graphics card, so starting mining requires a larger initial investment, as does scaling up the farm (buying one or two graphics cards is cheaper than purchasing additional ASICs). Furthermore, implementing significant computing power in a small device results in more heat generation and, consequently, a need for intensive cooling. Therefore, for the same hash rate, an ASIC miner generates more heat and noise than a GPU setup. However, these disadvantages are easily offset by the increased overall performance thanks to the lower cost.
Thus, for those who are serious about mining, ASIC miners are the best choice. If an investor considers mining cryptocurrency as a temporary activity for additional profit in favorable market conditions, they might prefer building a setup with graphics cards.
Other Criteria for Choosing Mining Equipment
Once a novice miner has made the fundamental choice between graphics cards and ASIC miners, they need to decide on specific models. They should consider the following factors:
- Algorithm or list of coins the device can mine. For GPU miners, this is not a concern, but it is crucial for ASIC miners. As mentioned earlier, the vast majority of ASICs implement only one algorithm (or some modifications of one algorithm), so the equipment must be chosen based on the coin intended to be mined.
- Pool requirements. Since solo mining of top cryptocurrencies has become almost pointless, miners should first choose a pool to connect to, and then create a list of possible devices based on the pool’s requirements. Pools aim to minimize their own costs and often restrict low-performance equipment from joining. An additional limiting factor may be the compatibility of the mining software used by the pool with client devices.
- Hash rate. The number of hashing operations per second that the equipment can perform is the primary measure of its performance. Naturally, miners aim to maximize this metric. It directly affects the reward size in a pool or the likelihood of finding a block in solo mining.
- Power consumption. This is the second most important characteristic of mining equipment. It determines the ongoing costs borne by the owner during cryptocurrency mining. Additionally, power consumption should be considered when choosing a location for the mining farm. For example, electrical systems in apartment buildings are typically designed for a total load of no more than 5 kW. Thus, connecting two ASIC S19j miners (each consuming slightly over 3 kW) in an apartment would overload the internal network, risking damage to electrical appliances and even causing fires.
In general, hash rate and power consumption determine the profitability of mining with the selected equipment. Miners should compare this profitability with the cost of the devices to decide whether to purchase them or consider other options.
For instance, the monthly profitability of an AntMiner S19Pro+Hyd (hash rate of 198 Th/s, power consumption of 5 kW, Bitcoin price at $72,000) on the NiceHash pool would be around $2,000, with electricity costs of about $1,500 per month.
The payback period for a new device would be around 15 months. With lower electricity costs, the payback period shortens to 8-12 months, providing an annual return of 50-100% in the first year of operation.
Thus, choosing mining equipment is not difficult. The main task for a miner is to decide on the farm architecture (graphics cards or ASIC miners), choose the cryptocurrency and pool for mining, and then select equipment based on its cost and mining profitability.