The year 2017 brought popularity to a new type of currency - cryptocurrency, especially the most popular of them, Bitcoin. Ring any bells, doesn't it? Although it is not a new concept - Bitcoin was created in 2009 - it has only recently been gaining popularity.
What is Bitcoin? It is an electronic currency in the form of a digital record, based on the so-called a decentralized peer-to-peer network. Bitcoin coins are stored in anonymous electronic wallets. In the assumptions, it is money independent of central banks and governments, resistant to inflation due to limited supply and safe, thanks to storage in a distributed blockchain database. It allows for quick and convenient transfers, bypassing external institutions and intermediaries.
Bitcoin is becoming more and more useful for two reasons: using it as a means of payment through a growing number of institutions around the world and thanks to its investment value. Its importance is also confirmed by the fact that one of the largest stock exchanges in the world, the CME Group from Chicago, entered into futures contracts based on the price of Bitcoin last year. In addition to these, other cryptocurrencies such as Ethereum, Ethereum Classic and Ripple also gain popularity.
The process of generating cryptocurrencies
Due to the fact that cryptocurrencies are usually not dependent on any institutions, the creation of new coins does not depend on the decisions of central banks or government bodies. Often their generation takes place in a process called "mining". This name refers to gold mining, for which excavators are necessary. However, unlike excavators extracting ore, excavators necessary for the "extraction" of cryptocurrencies are not vehicles but modified computers.
In the case of bitcoin, digging is closely related to the process of transferring currency between wallets. After the transaction, they are added in the so-called blocks to an already existing blockchain. However, before they reach the existing chain, they need to be approved, which allows you to sift errors and hinder counterfeiting. What is this approval?
On solving the cryptographic problem in the form of a kind of mathematical calculations. For this purpose, the computing power of computers connected to the network of "excavators" is used. "Miner" (owner of the excavator), who will find a solution to the above problem, announces it on the network, and the others check its correctness. If the solution is confirmed, a new block is added and the "miner" receives a reward in the form of a specified amount of cryptocurrency. He also receives remuneration in the form of a transaction fee paid by the ordering transfer, which is a much lower share than the above reward.
21st-century devices. What are cryptocurrencies excavators
To solve cryptocurrency problems - to generate cryptocurrencies - all computers, even PC classes, laptops and also smartphones can be used properly. Interestingly, you can "dig" even on the simplest mobile phone available on the market.
On most devices, however, this process will be unprofitable due to the low computing power in relation to energy consumption. Why? Because the cost of electricity used may be higher than the value of the obtained cryptocurrency. For this reason, specialized equipment is currently being built for the above process, which is intended for digging. This allows you to achieve maximum efficiency with the lowest possible energy consumption.
The most popular are sets based on the computing power of GPU graphics cards (used, among others, to generate Ethereum, Ethereum Classic or Monero cryptocurrencies) or dedicated ASIC machines (in the case of Bitcoin), there are also machines based on CPUs. The first of these is especially popular. This is mainly due to the general availability of components used, versatility (equipment can be used to dig a variety of cryptocurrencies depending on their profitability) or the ease of expansion. Many of the largest mines in the world are based on graphics-based systems.
In addition to the hardware itself, software is also important - programs are used for this purpose, so-called diggers. They are available on various system platforms, including Windows and the most popular Linux distributions.
Excavators with graphics cards
Contrary to appearances, these are quite simple constructions, similar to ordinary computers, which we have in homes or offices. They consist of standard components, such as the motherboard, processor or RAM memory. The basic differences between the excavator and the ordinary computer are graphics cards, a more powerful power supply that provides enough electricity for the set and a motherboard adapted to work with multiple graphics cards.
The heart of the design are GPU cards, which determine the efficiency of the excavator measured with the so-called the hash rate indicator (it determines the rate at which the system solves the cryptographic problem). The higher the hash rate, the more cryptocurrencies the device will produce at any given time. The most commonly used in the digging of graphics cards are the AMD Radeon RX 470/480 and RX 570/580 chipsets, due to the price to the hash rate achieved. The cards are programmically modified to obtain the maximum possible efficiency and the lowest possible power consumption. The most popular are sets containing 6 or 8 GPU cards, but there are also those with 12 or even 18 GPUs.
For the correct operation of the excavator, it is very important to provide the right amount of electricity. A device operating with 6 cards may need up to 1 kWh of energy. In addition, it is important to ensure proper cooling, because a significant amount of electricity consumed translates into heat generated. Too high operating temperature, on the other hand, may result in faster equipment wear, frequent failures, and even component damage.
Excavators with graphics cards are relatively universal devices, they can be used to generate many different cryptocurrencies. This means that if the profitability of digging a given currency drops, we can easily reprogram the device to generate another. This allows you to maximize profit by digging the most profitable cryptocurrency at a given time. The modernization of the equipment is relatively simple - all you have to do is replace the graphics cards and adjust the drivers. Other components usually remain unchanged.
Is mining profitable?
Cryptocurrency mining is currently booming due to high profitability, which reaches even 100% on a yearly basis with relatively low capital expenditure. However, this is a changeable business and it is difficult to expect an identical rate of return throughout the duration of the investment. It is influenced by two basic factors, ie the price of cryptocurrency and the so-called the difficulty of digging, which gets higher along with the amount of calculating power used by all computers generating a given currency, therefore their total hash rate. The cost of a single excavator based on 6 graphics cards oscillates at the level of several thousand zlotys. One should also take into account the provision of adequate electricity (its price is also crucial), proper cooling in order to maintain the highest failure-free and ongoing monitoring of the operation of equipment that operates 24 hours a day. The too small area in which the excavator would work may result in generating excessive heat, which will increased failure rate of the excavator itself, as well as inferior working conditions for people and other devices using the room.
How to start digging?
A beneficial solution is to use the services of an external company that specializes in operating the cryptocurrency mine. The most onerous activities related to device operation, such as work monitoring, configuration or current service can be transferred to specialists dealing with this every day. In addition, specialists in this model also deal with the analysis of the cryptocurrency market, making decisions as to the choice of the most profitable currency and configure the software on that basis. This allows you to maximize the efficiency of the device and minimize downtime.
Authors: Bartosz Nafalski, Omega Chief Executive Officer, Łukasz Bożek, Chief Financial Officer