From Elon Musk to Mike Tyson, Snoop Dogg to Twitter CEO Jack Dorsey, it’s pretty safe to say that if Bitcoin hasn’t already hit the mainstream, it will very soon.
The OG cryptocurrency has reached a level of popularity that even your grandparents are talking about it. And yet it is estimated that only 100 million people own it (1.28% of the human population) and even fewer (roughly 1 million) mine it.
So how exactly does one mine Bitcoin? Is it a worth the time and effort? And what’s the most effective way of building a mining rig that can turn a decent profit?
In this blog we’ll do our best to tackle these questions and more, but first…
What is Bitcoin?
We’ll keep this section brief because unless you’ve been on a ten-year digital retreat on the remote island of Tristan da Cunha (population 246), you probably know what Bitcoin is.
If not, here’s what Oxford has to say:
“A type of digital currency in which a record of transactions is maintained, and new units of currency are generated by the computational solution of mathematical problems, and which operates independently of a central bank.”
- Oxford languages
Essentially, the Bitcoin system is a collection of computers that store it’s blockchain, which is a database of every Bitcoin transaction ever made. As a peer-to-peer network, it is publicly accessible and decentralized, protecting its integrity.
Bitcoin has no standard price. In fact, it had no price at all and was purely theoretical until a Florida man by the name of Laszlo Hanyecz agreed to pay 10,000 Bitcoins for the delivery of two Papa John’s pizzas back in May 2010, thus cementing Bitcoin’s value at roughly $0.003.
We won’t tell you what 10,000 Bitcoins are worth today… ok fine, we will, it’s $483 million. Don’t get us wrong, we love Papa John’s, but at $241.5 mil per pizza, we may be forced to go the Domino’s route thanks.
Bitcoin’s value is simply determined by the market in which it trades—the forces of supply and demand at their finest. Bitcoin will sell for whatever price people believe it is worth. This caused it to be one of the most popular (and volatile) speculative financial vehicles of the past few years.
Where does Bitcoin come from?
Bitcoins are generated by “mining”, a competitive and decentralized process whereby transactions are processed using specialized Bitcoin mining rigs. Miners are rewarded for completing “blocks” of verified transactions, which can then be added to the blockchain.
Bitcoins are created at a fixed and predictable rate. All Bitcoin issuance will cease when a total of 21 million Bitcoins in existence is reached, which experts estimate will be in 2140.
Grab a pickaxe, it’s mining time!
Now that we’ve finished with history lessons we can get to the fun part. Building a Bitcoin mining rig isn’t that complicated if you have a little experience with computer hardware.
Whether Bitcoin mining is profitable for you will depend on several factors including the cost of electricity as well as the base, cost of the system.
We’re not looking at the cost of electricity vs reward of mining here, although people are finding innovative ways to offset the power drain by using excess heat generated by mining rigs to heat their houses.
There’s also some interesting thinking around whether the use of renewable energy can make Bitcoin more sustainable.
Miners need to have a system that is powerful enough to win in a race to complete complex hash equations or they will never receive any rewards. If you have equipment below this level, Bitcoin mining will never be profitable for you. However, there’s still a range of systems you could build depending on your budget.
Building a rig
To build your own Bitcoin mining rig you’re going to need:
- A motherboard
- CPU
- Graphics card
- Power supply
- RAM and storage
The system will need to be running 24 hours a day to be profitable. It’s also recommended to use an open-air frame to improve ventilation and reduce heat. You will just need a basic OS to be able run the mining software needed.
Motherboard and GPU
Any reasonable gaming motherboard from manufacturers such as ASUS or Gigabyte will be suitable for a Bitcoin rig. However, with the popularity of Bitcoin, several manufacturers have now released boards that are specifically built for mining that allow you to connect multiple GPUs.
The Biostar-TB250 lets you connect six GPUs, while the Asus B250 Mining Expert lets you use a staggering 19 GPUs for mining.
To make Bitcoin mining viable you have to have a decent graphics card. The better the overall processing power, the better chance you have of winning the hash solving race. There’s no limit to what you can spend here, with top tier cards running over £3,000.
At the budget end of the spectrum, the NVIDIA GeForce GTX 1660 is less than £300. It has a far weaker processing power than top tier cards, but this is balanced out by relatively low power draw.
If money is no object, the recently released NVIDIA GeForce RTX 3090 is an absolute monster of a card. Its hash rates are supreme with an incredible 24GB of onboard RAM. This will take you leaps and bounds ahead of most miners, but you’re certainly going to pay for it. These cards are rarer than leprechaun gold at the moment and you can expect to pay thousands to pick one up.
CPU, Power Supply and RAM
A bit of good news, and relief, is that you don’t need top tier equipment for the CPU, power supply or RAM. Any modern, basic multi-core CPU will be suitable for your purposes. The bottom of the range Intel and AMD chipsets will be fine as the GPU takes care of the heavy processing.
Similarly, you just need 4-8GB of RAM to be able to run a mining rig. While more RAM will help, it’s not essential and won’t make that much of a difference. To complete your system, you just need enough storage space for whatever OS you’re using and a power supply strong enough to feed your GPUs.
Put it all together, and you’re ready to rumble with your own mining rig.
The win-win of refurbed equipment
The biggest challenge you’re going to face in building a Bitcoin mining rig is in finding equipment. We’re facing global shortages of graphics cards and you’ll see a lot of “Out of stock” labels when browsing online stores.
Many people turn to the second-hand and reseller market to source the various components you need for a rig and in this respect, refurbished hardware is absolutely the way to go.
When a company upgrades IT infrastructure or goes out of business, their hardware doesn’t just go to the tip. Often it is made available to the corporate or private market after it is examined and re-certified. This means you can get great deals on hardware that still comes with a year warranty if you have any issues.
Final verdict
The best way to find out if Bitcoin mining is right for you is to use a Bitcoin Mining Profit Calculator. You’ll first have to determine the hash rate of the mining rig you’ve built, what its power consumption is and what your cost of electricity is per kilowatt hour.
Of course, you can always just buy Bitcoin and hold onto it, but where’s the fun in that?
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