Experience: The Arms Race Of Bitcoin Mining Hardware

Posted by: Jabberwocky July 10, 2014

Personal experience from the miner point of view – As some of you may already know, Bitcoin mining hardware has evolved since its beginning in early 2009. So lets hop in my time machine, I’m going to introduce you to the different families of mining hardware that were used and evolved at a faster pace since mid 2013.

At the beginning the CPU (Central Processing Unit) was used.  Yes, the good old CPU that any computer has. Can you imagine that at that time, you could earn 100 or 200 BTC in a few days with a good old Pentium 4 or similar? They were hashing between 1 and 2 MH/s for every 50-Watts used, 0.04MH/s/watt.

But keep in mind they are still worthless, no way to exchange them against anything until the end of 2009, beginning of 2010. With a block 50,000 a good old Pentium 4 earned you 0.02 (USD) a day.

With the opportunity to exchange BTC to USD people obviously wanted to earn and profit more, and so the arms race began!

In October 2010, the first open source GPU (Graphics Processing Unit) mining software is released, allowing the use of GPU instead of CPU will make a huge difference. Radeon 5830 and 5850 had a great success for this purpose, hashing from 250 to 300 MH/s for every 150-Watts used,2 MH/s/watt At that time, taking block 90,000 as an example, a single Radeon 5830 was earning 80 BTC, nearly 6 US$ a day.

But this would not last long, one month laterat the end of December 2010  looking at a block 100,000the same GPU was earning 16BTC a day, around 1 US$ a day.

So I’m sure you’re thinking “Hey, I still want more! I’ll buy 6 more faster GPU, and aRadeon 5870 to earn more. Welcome to the arms race, and it’s just the beginning.

You’re in luck though, since in February 2011 the BTC value went up to 1 US$.

Let’s fast forward to block 150,000 (October 2011) with a 2,000MH/s GPU mining rig using 1,000 watts. Take your calculator and figure out the exchange rate of 5US$ and your desired currency. Here are the results: 1.4BTC a day, so 7 US$, but I now have an electricity bill of 3.50 US$ a day. My net profit is 3.50 US$ a day.

Summer is hot though, and the electricity bill is starting to take a big part of my mining income. It’s now time for some new hardware.

In the mean time, in summer 2011, the first FPGA (Field-Programmable Gate Array) was developed for mining bitcoin. You can have a look here:

https://bitcointalk.org/index.php?topic=9047.0

The greatest improvement was the hash-rate/watts achieved.

With a X6500 FPGA Miner, that costs 500 US$, and hashing at 400 MH/s, you only use 17 wattsThat’s 23 MH/s/watt!

Wow, but I need one! No, wait, I’ll take 10 of them!!

So, I start by reselling the GPU on a marketplace, and then, for the same power usage, and some investment, I’m now the happy owner of 4,000MH/s using 170 watts.

Plus it’s much cooler in my room, so no need to have the widows open 24hr a day.

Back to the calculator, I paid 5,000 US$ for the FPGA, minus 1,100US$ for the GPU I‘ve sold, but nowI’m earning 13.70 US$ a day, my electricity bill is now 0.60 US$ a day.

13.00 US$ net profit. Much better. My investment will be returned in maybe 2 months, at least, I hope so, if the difficulty does not rise too fast.

Time for another fast forward. We are now on block 220,000, February 2013. After a few hiccups, exchange rate is back to 20.00 US$. But, reward for each block halved from 50 BTC to 25 BTC 2 months ago.

Before the halving, I bought a few other FPGA, and my mining farm is now 40,000MH/s, for every 1,700 watts used. I’m now earning a net amount of 25.00 US$ a day. Slightly more than 1 BTC.

But the next revolution in mining is approaching. It’s called ASIC for application-specific integrated circuit. That means that this hardware, unlike my GPU or FGPA, is only able to do one thing. And for the kind of ASIC I’m interested in, it means calculating transactions for , and calculating them fast with very low power draw.

Not even thinking about my calculator, I’m ordering 3 of the Avalon batch 3 asics 82,000MH/s, 700 watts and 1,500 US$ each We are reaching 117 MH/s/watt By the time I’ll receive them, my farm will be 286,000MH/s and will use almost 4,000 watts.

On block 230,000, in April 2013, thanks to the Bitcoin value going up to 50.00 US$ I’m now earning 70.00 US$ net a day, but difficulty goes higher quite fast now and if I want to continue earning enoughI’ll have to buy hardware again and again until I reach the limit of my power outlets.

The last fast forward will take us a few days ago, on block 309,700. Bitcoin has a steady exchange rate of 650.00 US$ 20 Antminers S1 are 3.6 TH/s for 7,200 watts. That’s 500 MH/s/watt. I’m now earning 44.00 US$ net a day after paying 26.00 US$ for electricity.

If you take a look back from the beginning to today, you can see that the race has been going at a faster pace while Bitcoin has become more and more popular since the exchange rate went higher. The same rule has always applied: you have to buy faster, more efficient hardware to continue earning money.

It took 5 years to come from 2MH/s/watt to 800-1,000MH/s/watt on the new ASIC from Bitmain or Rockminer that are available with other brands delivering soon. If somehow a  faster Moore’s law applied to Bitcoin, Let’s see how long it will apply…

Updated: 2014-07-10