WHY ARE GPUS USED IN CRYPTOCURRENCY MINING?

Mining , a complex economic system that revolves entirely on a similarity in some ways close to what was the gold rush. A fascination, an attraction at times even towards the unknown that hides behind a dense network of machines that do nothing but validate transactions made with the same currency with which they will be repaid .

In this regard, the first major distinction must be made between trading and mining . To "mine" cryptocurrencies the only investment to make is the hardware, you will not be required to buy currency of any kind.

The intangible foundations of virtual currency

The ethereal world of blockchain and totally decentralized money is actually based on a solid method of validating transactions carried out with the same currency, which in fact triggers a vicious circle in which circulating money allows a constant introduction of new currency , in absolutely calm and without the need for a gold standard in a central warehouse.

The backbone of the entire ecosystem of blockchain- based currencies , explained in much more detail in our dedicated in-depth analysis , is a mechanism of virtual "registers", called blocks, inside which a variable number of transactions carried out with the same currency are crammed. This is in the case of Bitcoin. Other blockchain-based currencies use their blocks to hold a completely different type of information . For example, Ethereum blocks contain contracts while on VeChain information flows on consumer products are recorded, such as tracking the supply chain of a high fashion product to protect the company from counterfeiting.

These registers are then used for the exchange of value or information between two or more sources in a peer to peer manner, without intermediaries. Whatever the type of information contained within the blocks, the computational potential of dedicated machines, called ASICs, or the more multifaceted one of our GPUs, is expressed in the validation of this information in a "democratic" way, that is, through a consensus mechanism simple majority .

A fraud-proof facility

The machines of the "miners" connected to the blockchain listen to these data streams and the identification codes of those who generated them, so in the case of the Bitcoin, the cryptographic signature of the sender .

The miners receive a copy of these registers full of encrypted transactions through what in computer science is called cryptographic hash function and must try to solve this function through a "guess" mechanism, or attempts, expressed in many hashes per second. Miners who are the first to approach this sort of reverse engineering (using an absolutely misnomer) can declare the block valid.

This is where the majority system comes into play, since anyone could enter a false transaction within a block and subsequently validate it fraudulently : it is not enough to validate the block first but it is necessary to wait for the majority of the computational potential, i.e. of miners connected to the network, valid that exact block.

The role of the hardware is therefore to perform thousands of calculations per second until it is as close as possible to the solution of that encrypted function in an algorithm called Proof of Work .

 

The gain comes from the commissions included in the transactions and a final prizewhich, in the world of bitcoin, has a predetermined value. The first miner on the network to close a block subsequently validated by the rest of the network will receive a preset number of Bitcoins. At the moment this prize is set at 6.25 BTC and is subjected to regular cycles to an anti-devaluation mechanism called halving that every 210,000 blocks halves the prize until the total reset of the reward, which will happen when the Bitcoins reach the famous quota of 21. millions of coins.

The role of GPUs

The Bitcoin system benefits from an automatic leveling of functions so that, as the number of miners and therefore the possibility of solution of the key increases, the difficulty of the function itself will consequently increase. For this reason, mining Bitcoin directly with a GPU is totally uneconomical at the moment. One of the currencies currently most mined with GPUs is Ethereum.

Finally, or sadly, we get to our GPUs. As recently detailed in our special dedicated to graphics cards , the beating heart of a video card is developed to perfection to carry out this kind of tiny and repetitive calculations in terms of thousands per second, becoming more and more used in mining.

The last big assault of miners on the gaming world was supported by the incredible performance of the AMD RX 480 first and the subsequent RX 570 then. Suffice it to say that, in Ethereum mining, while a last generation RTX 2080 is able to perform a peak of 37 Mh / s (Megahash per second), with an average of 20-25 and an energy consumption of just under 300 W, an RX 570 manages to pull off numbers approaching 50 Mh / s with extremely low consumption thanks to the exceptional Polaris architecture.

But why did NVIDIA's Series 30 become a miners' forbidden dream? Numbers in hand, the hashrate of an RTX 3080 is almost three times that expressed by the top of the range of the last generation with Turing architecture, settling at 86-87 Mh / s, with lower consumption and therefore a much higher gain, net of electricity. The RX 6800 XT also manages to make some interesting numbers, settling around 60 Mh / s.

As mentioned above, the Bitcoin platform gives new money in the form of a "lottery" to the first validator of the block, but also small amounts of value extracted from the commission of the transactions contained therein.

Some global mining giants have created organized groups called pools , which are currently available for most existing cryptocurrencies. You can join these groups by granting the computing power of your PC to the company that manages the pool, which will then benefit from the final prize but will pay users in cryptocurrency according to the work done.

In purely economic terms this translates into a net gain of about 7 Euros per day with an NVIDIA RTX 3080 or 5 Euros with an RX 6800, managing to recover the entire capital invested in the video card in about 3-4 months , against about two years needed to pay for a 2080 in the same way. For a more detailed analysis of your hardware there are also automatic calculators that allow us to obtain an estimate based on our card and the electricity rate we have at home.

For this reason, the new generation GPUs are extremely sought after for this use, but it cannot in any way be said that mining is the only cause of the problem of GPU shortage, a situation in which we have been for almost a year now and on which we tried to clarify in a dedicated video .