Specified hash rate

The first and foremost factor when selecting mining hardware is the hash rate that the rig is stated to deliver. Normally, companies that provide mining hardware ASICs provide a guaranteed hash-rate value that the mining rig will output on average. Sometimes it may be slightly more, and other times it may be slightly less, but over longer periods of time, it should average out to the guaranteed rate.

For Bitcoin-based SHA-256 mining hardware — the most advanced and efficient equipment — this hash rate is typically specified in tera hashes per second, or TH/s. Figure 9-1 shows the specified hash-rate capabilities for some of the most capable Bitcoin SHA-256 ASIC mining hardware, released anywhere from 2017 to 2022. As you can see, the equipment varies greatly, from a low of around 1 TH/s to around 140 TH/s.

Over the past few years, many different manufacturers have jumped into the Bitcoin-mining hardware-production game, increasing competition in the space and creating an ASIC-mining hardware arms race. This space has seen enormous growth, in terms of diversity of suppliers and hash-rate capability, within the last couple of years.

To stay competitive in the Bitcoin or other cryptocurrency mining realms, you need to use the latest and greatest hardware. Most proof-of-work blockchains have seen ASIC mining rigs developed for their network’s algorithm. This is arguably a good thing for those blockchains (though many complaints still exist about it), as it provides greater security for the blockchain and decreases the likelihood of attack by increasing the resources needed to attack the blockchain. Remember, the whole point of proof of work is to make finding a block difficult so that it’s not easy to attack the blockchain.

The danger in ASIC mining hardware when it is first released, however, is that the hardware will be quickly made obsolete … it will be superseded by new, more efficient products. You may think that, in order to stay ahead of the crowd, you should buy the very latest equipment, even pre-order equipment before it’s ready. However, that strategy comes with its own risks. Some shady manufacturers have sold mining hardware with long lead times and with implied or calculated earnings that will not match the earnings that the equipment will realistically gain once the mining hardware is delivered. As you wait for delivery, the blockchain’s block difficulty and hash rate increase, perhaps dramatically during early-stage ASIC development. The longer you wait, the less competitive the ASIC will be once you get it into action.

Dishonest ASIC sales are not as bad a problem as they were in the past, at least for most mature proof-of-work blockchains, because of manufacturer diversification and the fact that, as ASICs mature, ASIC efficiency gains are harder to come by. However, for new algorithms that have not had ASIC-specific hardware developed, there may still be significant risks for early-edition hardware purchasers.

Specified power consumption

ASICs are far more powerful than your regular CPU or GPU, so they are able to hash much faster. That’s the whole point, after all. However, nothing’s free; ASICs can use a considerable amount of electricity. Each ASIC has a rated power consumption — that is, before purchasing it, you should be able to check the equipment specifications and find out how much power it’s going to use when you start mining.

Power is measured with the International System of Units, using watts, and energy consumption is measured in watts per hour. Old-fashioned incandescent light bulbs typically consume about 20 to 100 watts — when you buy incandescent light bulbs, you’re probably usually buying 60, 75, or 100-watt light bulbs — while today’s LED light bulbs may output the same amount of light while using between 4 and 15 watts. Say that you have a 15-watt light bulb and run it for an hour; you’ve just used 15Wh — 15 watt-hours. What does that cost you? That depends on where you are. For example, in Denver, a watt-hour is about 0.01 cent, so running a 15W light bulb for an hour — consuming 15Wh — costs around 0.15 cent; run it for 100 hours, and it costs you about 15 cents.

A typical desktop computer with a CPU and GPU on board may consume anywhere from 400 to 1,200 watts, perhaps a little more. (The most recent Mac Pro uses around 900 watts.) Laptops generally use much less power; co-author Peter Kent’s MacBook Pro has an 85W power supply, for example.

However, state-of-the-art ASICs now being deployed onto the Bitcoin network consume between 1,000 and 6,000 watts (1.0 to 6.0kW — that is, kilowatts; a kW is 1,000 watts). For a comparison of some of the Bitcoin SHA-256 ASICs being used on the network today, see Figure 9-2.

How do you figure out your own power cost? Check your electricity bill, find your most recent paper bill, or log on to your power-company website account. You may have to look at the actual bill or you may find a summary. Figure 9-3 shows an example of the electricity consumption area on a bill.

Notice that the electricity is billed for kilowatt-hours, not watt-hours. Figure 9-3 shows that this utility company has billed a base rate of $0.05461 per kWh (with two different time periods — Non-Summer and Summer Tier 1, although in this case, the rate is the same for both periods). Then the utility has charged additional rates for various special fees: the Trans Cost Adj, the Elec Commodity Adj, and so on … whatever these things are (and we really don’t care). We just add up the different rates — $0.05461, $0.00203, $0.03081, $0.00159, $0.00401, and $0.00301 — to come up with the kWh charge: $0.09606. That is, this utility charges 9.606 cents per kWh of power consumed.

Power consumption inputs and hash-rate outputs for mining hardware are important factors when considering which mining equipment is right for you. However, both of these metrics are more useful when combined. After all, what we care about is how many hashes we can get for a buck, as it were. What good is an ASIC that consumes almost no energy if it outputs almost no hashes? Or an ASIC that outputs a huge amount of hashes, but at twice the cost per hash of other equipment? What counts is how much we’re going to have to pay for a particular hash output. We’re concerned with efficiency. (Right now, we’re talking about the cost in electricity, of course, not the cost of the actual equipment.)

Efficiency is typically defined as useful work performed divided by energy expended to do that work. However, when it comes to ASIC mining hardware, manufacturers often list this metric in reverse. ASIC mining equipment is often listed with the energy expended (in joules) divided by the work performed (tera hashes/second).

A joule is a unit of energy equivalent to a watt per second or 1/3,600th of a watt-hour. Wikipedia defines it as “The work required to produce one watt of power for one second, or one watt-second (W⋅s).” Thus, a watt-hour (Wh) is the equivalent of 3,600 joules (1 joule per second, multiplied by 60 seconds in a minute, multiplied by 60 minutes in an hour is 3,600; 1kWh would be 3.6 megajoules — 3,600,000 joules).

So ASIC manufacturers often show an “energy expended per output” value that allows users to easily compare mining hardware efficiency. ASIC specs are often provided in terms of joules/hash. For example, look at this excerpt from a review of mining equipment:

“Thanks to the DragonMint 16T’s new DM8575 generation of ASIC chips, the 16T has become the most electrically-efficient miner on the market. Consuming merely 0.075J/GH, or 1,480W from the wall, the 16T is 30% more electrically-efficient than the Antminer S9…. When compared to its closest competitor, the Antminer S9, the DragonMint 16T is the clear winner. It hashes at 16 TH/s, as opposed to the S9’s 14 TH/s. Moreover, the 16T consumes 0.075J/GH, whereas the S9 consumes 0.098J/GH.”

The review states that this particular miner (the DragonMint 16T) uses 1,480W, so over an hour, it would consume 1.48kWh of electricity. (In Chapter 11, you can see how that affects the cost of running the equipment.) But we’re also told that it consumes 0.075J/GH. (That is, .075 joules per giga hash, or .075 joules of energy is consumed every time the device runs a million hashes.) As you can see, this data can be used to directly compare mining equipment; the S9 consumes 0.098J/GH. That is, the S9 consumes around 31 percent more energy for the same number of hashes.

For a ranking of the most recent SHA-256 hardware released to mine on the Bitcoin network, see Figure 9-4. On the left, you see the less efficient equipment. The Antminer S7 requires around 275 joules to output a tera hash per second, while at the other end of the charge, we see equipment that is outputting a tera hash per second while consuming around 20 joules.

We’ve provided similar charts for a few other common mining algorithms. Figure 9-5 shows X11 ASIC miners designed to operate on the DASH network, Figure 9-6 displays Scrypt ASIC miners built to hash toward the Litecoin network, Figure 9-7 ranks Equihash ASIC miners that can mine on the Zcash network, and finally Figure 9-8 plots Ethash ASIC miners by efficiency. Miners on the left of these charts with a lower energy (joules) consumption per output (hash) would be more profitable to operate as electricity cost per work would be less. For more on the economics of mining, see Part 4 of this book.

Mining equipment efficiency is a very important factor in deciding what hardware is right for you. The lower the energy usage per work output, the less power will be spent, the lower power bills will be, and the more cost effective the mining hardware will be.

Cost effectiveness is critical to long-term survival in the mining industry, whether you’re deploying a commercial mining facility or becoming a home hobbyist miner. Over time, most of the costs will be from operational expenditures, of which the biggest part is the cost of electricity. For more on the economics of mining, refer to Chapter 11.

Equipment cost and other considerations

The cost and affordability of mining hardware fluctuates wildly, similar to the market capitalization of cryptocurrency assets. During some periods, the cost of mining equipment moves surprisingly in tandem with the market. If the price is going up, new and used mining equipment sells at a premium. If the price is down, the hardware sells at a steep discount as large mining firms and manufacturers liquidate equipment stockpiles.

In any market condition, however, the newest, most efficient equipment is always expensive. These high-efficiency mining rigs are in high demand, regardless of the price of the cryptocurrency they mine. At the time of this writing, the state-of-the-art SHA-256 ASIC equipment can range from a few hundred to a few thousand dollars.

For the best prices on new hardware, the most dependable route is to purchase straight from the manufacturer and avoid the middleman who sells hardware above the manufacturers’ listed prices.

On the other hand, some manufacturers simply don’t sell small retail quantities. Other manufacturers don’t allow purchasers to use local fiat currencies to acquire their products, and sell their hardware only for Bitcoin or the cryptocurrency the hardware specializes in mining. Another thing to really carefully check is the lead time for delivery after purchase. If you’re buying the latest and greatest piece of hardware at a premium, your advantage may be minimized if actual delivery is delayed for a long time.

You may also be able to buy used hardware. Check marketplaces, such as eBay, Amazon, Newegg, Alibaba, or Craigslist. However, beware of sellers on most second-hand markets, and remember that some markets are more reliable than others. (For example, on Amazon, you can return the equipment if it turns out to be faulty or oversold in some way.) Always do your research on the equipment specifications, such as hash rate, power consumption, and efficiency, before you buy.

Length of time your hardware will be viable

Another thing to consider is how long the ASIC equipment you’re buying is going to be able to keep up and stay profitable. That is, as block difficulty and hash rate requirements increase, how long will it be until your hardware is hopelessly left behind?

A number of factors determine the viability of a cryptocurrency ASIC miner, including the network hash rate and thus block difficulty, market exchange rate for the cryptocurrency you’re mining, mining equipment efficiency, and your time preference.

For the most part, network hash rate on any cryptocurrency lags the exchange price. Remember, network hash rate increases as more miners enter the network or existing miners buy more mining equipment, and network hash rate goes down as miners leave. So, if the cryptocurrency price soars for a month, the hash rate for the forthcoming months will most likely go up as more miners jump in, and vice versa; if the exchange rate falls, then in the following months, hash rate may also fall as miners shut down their unprofitable equipment.

During a period in which the cryptocurrency prices rise, you may earn less of the cryptocurrency — as miners bring more equipment online, your percentage of the network hash rate drops, leading to less frequently mined rewards — but you may still be earning more money in terms of dollars (or whatever fiat currency you work with). You mine fewer coins, but those coins are worth more.

The inverse is also true. During times of falling value of the cryptocurrency you’re mining, and subsequent falling hash rate, your mining equipment will produce more reward when measured in the mined asset, but those larger quantities of cryptocurrency may be worth less overall when measured in your local fiat currency.

This is where your time preference factor comes in, in combination with your assessment of the future value of the cryptocurrency you are mining. Time preference is the value you place on receiving something now, as opposed to the value you would place on receiving it in the future. An individual with high time preference is more concerned with their present well-being and satisfaction when compared to a low time preference individual who would rather put that reward off until a later date when their satisfaction may be increased.

If you believe in the cryptocurrency you’re mining, and you believe that the price will go up in the long term, you may want to continue mining. Even during market downturns, as network hash rate comes down, competition is reduced. Your percentage of the network hash rate goes up, and so it costs you less to mine the same amount of cryptocurrency.

Here’s an example. In December 2018, Bitcoin dropped below $3,300 (USD) per coin. For many miners, perhaps most, mining became unprofitable, but mining didn’t stop. Why? Because the people who continued mining believed that the price would come back. They were right. A few months later, a coin was worth almost four times that value. So if you’re willing to defer present gain for future gain, and if you’re sure that there will be a future gain, then you’ll want to continue mining through the bad times (which, if you’re right, will eventually look like the good times!).

Cryptocurrency miners with a low time preference, and faith in the cryptocurrency, may continue to use slightly “unviable” mining equipment during what appear to be unprofitable mining conditions, because they anticipate profits in the future.

As network hash rate increases, and as competing mining equipment gets more efficient — as the newer equipment is able to output more hashes for each kWh of power consumption — your equipment will become less profitable. It will mine fewer coins than before, and each coin will cost more. At some point, it will make economic sense to replace the mining equipment with more efficient equipment.

A typical state-of-the-art Bitcoin or cryptocurrency mining rig today may have a viable life of four or more years. However, going forward, the viable life of an ASIC may increase as hardware efficiency gains of ASICs become slower and more difficult to come by. Refer to Figure 9-4 to see how efficiency gains have trended for mining equipment released over the past four years.

For example, the Bitmain Antminer S7 was released in late 2015, as the most efficient and capable miner on the market at the time. In some situations, if miners have a low time preference and access to abundant or cheap electricity, the S7 is still a profitable miner and is still being operated today roughly four and a half years later. The S7, however, is close to its end of life and is the least efficient Bitcoin ASIC miner listed in Figure 9-4. Compare the S7 (at 275 J/Th/s), with the Antminer S17 Pro-15, which uses around 40 J/Th/s. That is, the former uses around seven times the electricity to do the same work.

Useful life spans of computer hardware are never guaranteed, especially in the fast-moving cryptocurrency mining industry, but with proper research, due diligence, and knowledge, these risks can be mitigated. Always perform product research prior to purchase and reference profitability projection tools to ensure life cycle profitability. See Chapter 11 for more information on calculating mining profitability.

ASIC rig producers

Here’s a list of some top ASIC producers who make the most capable equipment and the most efficient hardware, designed specifically to hash and mine towards Bitcoin and other cryptocurrencies that utilize the SHA-256 hash algorithm. For a list of other cryptocurrencies that use this algorithm, see the list in Chapter 8.

• Bitfury (https://bitfury.com/crypto-infrastructure) is the manufacturer of the Tardis Bitcoin SHA-256 mining hardware.
• Bitmain (https://shop.bitmain.com) produces the Antminer series of mining hardware and sells ASIC equipment that specializes in SHA-256, Equihash, and other popular mining algorithms.
• Canaan (https://canaan.io) created and manufactures the Avalon series of SHA-256 Bitcoin miners.
• Ebang (http://miner.ebang.com.cn) produces the EBIT line of ASIC miners that specialize in the Bitcoin SHA-245 hashing algorithm.
• Innosilicon (https://innosilicon.com/html/miner) produces mining equipment that specializes in the Equihash, SHA-256, Scrypt, X11, and other popular mining algorithms.
• Whatsminer (https://whatsminer.net/shop) makes the M series line of Bitcoin SHA-256 mining hardware.

Beware of new manufacturers selling ASICs with sensational specifications and industry-leading hash rate and efficiency numbers! A number of cases have occurred in the past (and we’ll likely see more in the future) where newly created hardware manufacturing companies released a presale on new ASIC hardware with amazing specs. Often, these scams only accepted Bitcoin or other cryptocurrencies as payment for the presale. Of course, the hardware was never created or delivered, and the “manufacturer” was never seen or heard from again. (This is sometimes known as an exit scam.)

Mining container producers

Check out the following prebuilt mining hardware containers that provide “mobile mining units” for Bitcoin or cryptocurrency mining:

• Bitcoin Mining: https://blog.upstreamdata.ca
• Bitcoin Mining Container: www.bitcoinminingcontainer.com/bitcoin-mining-container
• Digital Shovel: https://digitalshovel.com

GPU rig producers

Check out the following list of prebuilt GPU mining hardware providers.

• The Coinmine (https://coinmine.com) is a GPU mining rig with an easy-to-use interface that has the ability to mine a variety of cryptocurrencies, such as Ethereum, Grin, Monero, and Zcash.
• The MineShop (https://mineshop.eu) has many products for sale, including ASIC miners, large-scale cryptocurrency mining operations built into 20-foot shipping containers, and Ethereum GPU rigs.
• MiningSky (https://miningsky.com/gpu) provides the V series of GPU miners with potentially eight onboard GPUs to amplify mining capability.
• Mining Store (https://miningstore.com.au) provides prebuilt GPU mining rigs that can mine a variety of cryptocurrencies with 6, 8, or 12 onboard GPUs to maximize mining returns.
• MiningStore (https://miningstore.com) provides a variety of different services, including mining hosting, mining containers, as well as prebuilt GPU and ASIC mining rigs.
• The PandaMiner B Pro series (www.pandaminer.com/product) are prebuilt GPU mining rigs that can mine Ethereum, Grin, Monero, and Zcash.

Vet your home for cryptocurrency mining

The easiest and most affordable place to start slowly testing the waters in cryptocurrency mining is at home. You already have the resources that would be required to start a cryptocurrency mine: Internet access, electrical power, and space.

Some homes are more suitable for mining than others. An apartment, for example, may not be the best location due to limited space and the noise of the mining equipment. A single-family house would be a better location when compared to a multifamily dwelling like an apartment; you wouldn’t want to keep yourself or your friendly neighbors up at night while your mining equipment hums along.

Mining equipment, ASICs specifically, is typically cooled by an intake and an exhaust fan that run anywhere from 3,600 to 6,200 rotations per minute. (6,200 RPM fans produce 60 to 100 decibels or more!) These high-RPM cooling fans create quite a bit of noise and exhaust, and an even greater amount of heat. Some places in a home are better than others. For example, you wouldn’t want a 6,200 RPM fan buzzing on your bedside table or in your kitchen.

The best places to run mining equipment in a residence, if that is the place you select, would be in a garage, an easily vented garden shed, or a cool basement with plenty of airflow for ventilation.

Regardless of whether your residence, an industrial facility, or some other suitable location is the place you select to deploy cryptocurrency mining hardware, there are a few things to consider in the space you choose. Ease of ventilation, cooling in hot months, Internet connectivity, and adequate power supply are all essential. Ventilation becomes easier and more affordable if the climate you’re mining in is cool, cold, or mild for large portions of the year.

Communication requirements

Cryptocurrency miners have to connect to a global network of blockchain nodes, so communication connectivity is key. Most importantly, you need a reliable connection to the Internet. This connection can come in many forms, but for mining, you need to be able to send as well as receive information, so both upload and download links are important. A high-bandwidth connection is not absolutely required, but low latency in connectivity is often best as every millisecond (thousandth of a second) in the mining sphere counts.

Bandwidth is the amount of throughput: how much data can be transferred, often measured in megabits per second (Mbps). Latency is the time delay that the data takes to make it from A to B, often measured in milliseconds (ms) or thousandths of a second.

Power source thoughts

The place where you set up your mining equipment must have an adequate power supply for that equipment. If the mining you’re planning to do is on a normal desktop computer, a typical 120-volt outlet can feed enough power to your computer’s power supply. In the case of dedicated cryptocurrency mining hardware, the equipment consumes thousands of watts of electrical power to produce many trillions of hashes per second.

In addition to the 120-volt circuit that you plug most of your devices into — your TV, hair dryer, lamps, and so on — your home also has 240-volt circuits; that’s what your air conditioning and clothes dryer connect to. A 240-volt circuit can feed the higher-voltage ASIC mining equipment you may use.

Still, you need a few pieces of electrical gear to ensure safe and reliable power delivery to any piece of cryptocurrency mining hardware. You need power delivery units (PDUs), properly rated power supply units (PSUs), and upline electrical wiring and breaker panel infrastructure.

Power delivery units

Power delivery units route power from electrical outlets to power supply units. These are typically 240-volt devices in the United States. They deliver power and protect against circuit overload. These PDUs may also be able to connect and feed multiple power supply units, depending on their rating. They typically have an internal 240-volt line-to-line electrical bus that feeds a few breakers providing electrical surge protection to the outlets they are feeding. You can see an example in Figure 9-9 shows a PDU from CyberPower.

For example, an adequately rated electrical supply line, per the specifications in the National Electrical Code (NEC), feeding a PDU rated at 240 volts and 30 amps, may then feed three separate 240-volt 10-amp breakers in the PDU.

The equation to calculate electrical power (P, measured in watts) from voltage and amperage is fairly simple. We use P=V*I, where P is power (the rate of energy flow, in watts), V is voltage, and I represents current, measured in amps.

Using this equation, a 240-volt 10-amp PDU outlet would be able to provide about 2,400 watts (2,400W = 240V * 10 amps), and thus each PDU could power most of the ASICs specified in Figure 9-2 (shown earlier in this chapter), but not all of them. As shown in that figure, a few on the left side are going to require more power than that!

This configuration provides individual electrical overload protection to the three outlets on the PDU and helps isolate any equipment or electrical faults downstream of any of the outlets while maintaining power to the other two outlets.

PDUs are not always necessary, depending on the size and configuration of the mining equipment, but their use can provide additional electrical fault protection and safety to multiple pieces of mining equipment. PDUs are reasonably priced for the electrical connectivity, convenience, and peace of mind they provide, and can be purchased from many web-based suppliers.

Power supplies

Power supplies for the cryptocurrency mining space have come in all shapes and sizes, from a typical power supply unit (PSU) that would be found in a desktop computer all the way to dedicated pieces of hardware specially designed for cryptocurrency mining applications. See an example in Figure 9-10 for an example from Bitmain.

PSUs are often bundled with ASIC mining hardware in a package purchased directly from the manufacturer with the specific cryptocurrency mining hardware they can support. PSUs can also be found on many online marketplaces. Power supply units can come in 120-volt or 240-volt varieties, and some are able to be dual voltage (connecting to either voltage), depending on the outlet type you have available. If buying a PSU separately, you need to ensure that the PSU’s rated wattage is greater than the maximum power consumption of the mining hardware it’s going to power.

The rated wattage of the power supply should exceed the rated maximum power consumption of the cryptocurrency mining hardware being used. Otherwise, the power supply won’t be able to service the electrical load. This underrating could lead to electrical faults, frequent power supply failures, or mining rig failures. All of these outcomes are dangerous and costly, so you really need to use a power supply that’s adequately rated for the hardware (the ASIC or GPU mining rigs) you’re trying to power. Refer to the manufacturer’s mining equipment manual for more specific information.

Be really careful with your mining installations! An improperly configured and installed mining operation represents a serious fire risk. Don’t think this can’t happen to you; it’s happened to others. If you’re at all unsure of what you’re doing, get a professional electrician to help you set up your gear!

Data centers and other dedicated commercial locations

Aspiring cryptocurrency miners who want to scale up to a significant mining deployment will find that commercial locations, such as warehouses or dedicated data centers, may be the best route. Large mining operations simply won’t fit into your apartment or home.

You have essentially three options:

• Build your own data center. Find some warehouse space or a shipping container, for example, and build from scratch.
• Work with a colocation center. Colocation centers are all over the world, and are designed primarily to manage web servers. They come with reliable power, flood, and fire protection, redundant Internet connections, and so on. They charge for the space you take up in their racks and the bandwidth you use.
• Work with a mining-service hosting company. These services charge reasonable fees to host equipment that you own, including space and electrical costs in their tailor-made and ready-to-deploy commercial spaces. They are, in essence, colocation services, but designed specifically for cryptocurrency mining. Here are a few popular cryptocurrency mining equipment hosting services.
  • Blockstream: https://blockstream.com/mining
  • Citadel 256: www.citadel256.com
  • Compass Mining: https://compassmining.io
  • Compute North: www.computenorth.com
  • Core Scientific: https://corescientific.com
  • Frontier Mining: https://www.bitcoinmined.net
  • LightSpeed Hosting: www.lightspeedhosting.com
  • Mining Colocation: https://miningcolocation.com
  • MiningSky: https://miningsky.com/miner-hosting
  • MiningStore: https://miningstore.com/mining-services
  • TeslaWatt: https://teslawatt.com
  • Upstream Data: https://blog.upstreamdata.ca