Mining Hardware
In theory you could still go old-school and mine Bitcoins using your regular computer’s CPU or a high-speed video processor card. However, the industry has been overtaken by custom-made Bitcoin mining application-specific integrated circuits. Of course, this has increased the difficulty and now trying to mine with standard CPUs is financially unviable because of the cost of the electricity required to run the CPU.
Modern Bitcoin mining rigs are made specifically for the job and use GPUs (decreasingly), FPGAs and ASICs.
A Graphics Processing Unit (GPU) is specially designed to quickly manipulate memory to speed up the creation of images for a display device such as your computer’s monitor. But their parallel structure also makes them highly efficient at for processing large blocks of data. So you can find GPUs in video cards but they may also be embedded on the motherboard.
More efficient than GPUs are Field Programmable Gate Arrays (FPGA). These are circuits designed by the manufacturers to be customised after they’ve been made. They are configured using a hardware description language similar to that used in Application-specific integrated circuits (ASICs).
They contain logic-blocks and a system of configurable interconnects for wiring the blocks together. They also typically use much less power than GPUs and have higher hash rates.
If you are at all serious about getting involved in your own mining operations, you will want to build or buy a rig using ASICs.
First released in 2013 ASICs feature low power consumption and massively faster hashrates than the other technologies. Being application-specific, Bitcoin mining ASICs can only be used for Bitcoin mining. But since you want to start Bitcoin mining, that won’t matter!
The popularity of Bitcoin mining has, for the first time, stopped the decrease in value of chips. Previously, once a fast circuit was released it would gradually decrease in value and could be bought cheaper several months after release. Now that trend has been reversed with the most popular chips almost doubling in price. Supply and demand at its best.
See here for a typical mining rig configuration. As a guide, a good rig in a good mining pool will make back its cost in around 6-9 months. Setting up your own rig and mining directly for yourself is tremendously satisfying. But it requires a degree of technical knowledge and your rig will almost certainly produce noise and heat along with Bitcoins.
On top of the hardware, you'll also be needing the relevant software to start your mining operation. The good news is that most mining programs are free and open-source.
