A crypto mining rig is an expensive and sophisticated computer that does intensive computational processes to produce cryptocurrencies like Bitcoin or Ethereum. Mining rigs are used to create new coins by solving complex cryptographic problems that verify transactions on a blockchain — the decentralized ledger technology that underlies all cryptocurrencies.
In the beginning, crypto mining was a simple process in which individual miners set up their computers with the specific job of crypto mining. This was an easy task that required little to no additional hardware.
As time passed, the cost of crypto mining hardware rose dramatically, which meant that crypto mining rigs had to evolve to stay competitive. With the rising popularity and tenaciousness of cryptocurrencies, people are now investing heavily in the deregulated currency. People are even choosing to invest in crypto IRAs — investing in cryptocurrency as part of their retirement portfolio.
Mining rigs can produce various cryptos, but are also advantageous to an IRA and other financial investments.
Types of Crypto Mining Rigs
There are a few different types of crypto mining rigs available depending on how much the miner is willing to spend, the amount of power they can use, and the cryptocurrencies they wish to mine.
Each crypto coin network has its unique algorithms that need to be solved for new coins to be released into circulation. There are also specific hardware requirements for each blockchain. Here are some of the most popular crypto mining rigs!
Cryptocurrency mining with a CPU means using a computer’s processor – usually the central processing unit (CPU) – to mine for cryptocurrencies. The process involves solving complex puzzles. Solving these puzzles is like earning money from the cryptocurrency you’re mining because solving the puzzle earns you a certain amount of coins, which are then deposited into your wallet. This reduces any volatility in price and allows for a more consistent income.
To mine cryptocurrency with a CPU, you will need the following things:
- A computer with a strong processor (or two);
- Graphics card(s);
A GPU (Graphics Processing Unit) is the hardware that computes pixels in most computer graphics processing units. This makes GPUs great for graphical computation tasks like rendering 3D scenes and playing high-end video games. GPUs are also used for at least one type of cryptocurrency mining.
In this scenario, the computer’s graphics processing unit (GPU) can be used to perform complex mathematical calculations. The more complex the math, the faster it will compute on your GPU.
Your graphic processor then processes the results and spits out blocks of a cryptocurrency such as Bitcoin or Ethereum.
GPU mining rigs have become very popular. These small, custom-built computers contain at least 3 graphic processing units (GPUs) and are probably the most energy-efficient method of mining cryptocurrency. All you need is a cheap video card to run them, and it doesn’t matter if your video card is made by NVIDIA or AMD.
ASIC stands for Application-Specific Integrated Circuit, which is a type of computer chip designed to have a single purpose unlike normal CPUs found in personal computers. Due to the nature of this integrated circuit, it is faster and more efficient than normal means of computing, which makes ASIC mining rigs highly sought after among miners. These ASIC devices are made specifically to mine cryptocurrencies such as Bitcoin.
The main problem with ASIC mining is that it is highly centralized and limited to a small number of manufacturers who have access to huge quantities of specialized hardware (e.g., giant server farms), which makes the process of mining difficult for those without access to ASIC miners.
The only way for the general public to take advantage of the hardware-driven mining industry is through partnerships with mining software companies that provide a fully automated means of mining on some popular platforms.
An FPGA is an integrated circuit with programmable logic capable of quickly performing complex mathematical functions. FPGAs have been around since the ‘80s, but the idea of building specialized computers on them for mining cryptocurrencies is new.
FPGAs’ advantage over GPUs is that they can be used for anything a general-purpose computer can do. This means that you can not only use an FPGA miner to mine your favorite cryptocurrency, but you can also use it to mine other algorithms.
For instance, you can use an FPGA to build a miner that mines other cryptocurrencies like NEO, DASH, Monero, or Ethereum.
Cloud mining rigs have been increasing in popularity as more people turn to cryptocurrencies for their investments. Investors are looking for new ways to make money and this is just one of many strategies that have been gaining traction.
The idea behind cloud mining is that it focuses on generating cryptocurrency while the user puts up a share of the processing power, which can be scaled or increased depending on how much they want to invest.
Do You Need a Mining Rig to Invest in Crypto?
If you’re looking to invest in crypto, you may have wondered whether a mining rig is something you should consider investing in. A mining rig isn’t going to add much value if all you want is a stake in Bitcoin or Ethereum alone.
However, if you’re investing in cryptocurrency and want to get the very best returns on your money, a mining rig is something you should seriously consider.
If you have cryptocurrency and are looking to lend it, companies like Compound make it easy to reap short-term profits using the principles of compound crypto.
Tax advantages may also be enjoyed through mining. It’s no secret that people who mine and invest in crypto are taxed. Miners are double-taxed — paying capital gains of when a crypto was mined and when you sell it. CryptoIRAs have a workaround. By claiming mining hardware as an owned asset in your IRA (owning the machine), you may avoid this double taxation. This is a fairly new concept, however, and it’s not clear whether this will stand going forward.
Should You Build a Crypto Mining Rig?
Building a crypto mining rig requires a great deal of know-how in cryptocurrency and computers. It also requires a sizable budget. But if you know what you’re doing, you can reap the fruits of your labor. Here are some of the pros and cons of building a crypto mining rig:
- Lucrative profit long-term if done correctly; the current reward for solving a bitcoin block is 6.25 Bitcoins;
- Cryptocurrency is decentralized, meaning there is little chance of theft;
- Requires a lot of energy, which can raise the cost of your electric bill significantly;
- Requires a huge investment (think tens of thousands of dollars) upfront;
- Typically needs long periods of time before any gains appear;
- Blocks are immensely competitive among miners all over the world, so the chances of being the one to solve a block are relatively low.