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GPU mining “uses specialized computer hardware called Graphics Processing Units (GPUs) to verify transactions on a blockchain network and earn cryptocurrency rewards by having the GPUs do complicated calculations and solve mathematical algorithms.” [1]

GPU mining emerged amid the craze of cryptocurrency mining. Cryptocurrency is a virtual currency used for digital trade. Cryptocurrency works on the basis of blockchains that store information of transactions. This process of writing the transaction information on blockchains in the digital world is like writing on a ledger in the reality world. In a bid to decentralize, the right to verify and write down the transaction information on blockchains (namely, adding new blocks to the blockchain), is given to all users in the digital world. By competing for the right to write on this ledger, individuals, groups, or organizations could receive rewards, usually cryptocurrencies like bitcoin, from the system. When a new transaction happens, the system creates a hash specific to the transaction that consists of numbers and letters. [2] Computational devices like GPUs and CPUs are used to produce guesses. Those that successfully guess the hash will earn the cryptocurrency rewards.  

How It Works

The speed at which a computing device produces new guesses of the hashes is called hash rate.[3] GPU hash rate refers to “the number of raw ‘hash’ equations used by cryptocurrencies and similar technologies that a graphics card can solve in a second.”[4] In other words, a GPU’s hash rate shows how fast the GPU can generate new guesses for the designated hash for a certain transaction that is to be used for the creation of a new block on blockchains.

GPU Mining vs. CPU Mining

While central processing units (CPUs) were used to mine cryptocurrency like bitcoin in the early days, they were gradually replaced by GPUs because CPU mining was inefficient and energy intensive in terms of mining bitcoins. [5] To play with numbers and letters and produce a hash that meets the difficulty conditions set by the system is the repeated processing of the same task, which means that computational devices that can handle large numbers of tasks of the same nature in parallel have greater bitcoin mining efficiency.[6] The most common cryptocurrency that GPUs are used to mine is Bitcoin that uses a consensus mechanism called Proof of Work (PoW).[7] PoW requires miners to join the race of solving complicated mathematical problems to be selected to verify transaction information and to add new blocks to blockchains. It is for this reason that cryptocurrencies like Bitcoin that uses PoW requires high computing power to mine. Since there is no central authority to verify transactions in cryptocurrencies, the system verifies by allowing each user within the system to see and check the new block added to blockchains. The winner of the race gets cryptocurrency rewards only after other users verify that “the data being added to the chain is correct and valid” [8]. Other cryptocurrencies not using PoW could not be mined using GPUs. For example, Ethereum shifted from PoW to Proof of Stake (PoS) in 2022 and can no longer be mined using GPUs.[7]

Environmental concerns about GPU mining

In order to maximize computing capacity, miners usually put multiple GPUs together to form a mining rig. Together with the strong computing power is the huge energy demand of GPUs, which in turn gives rise to environmental concerns when used for cryptocurrency mining. High computing power usually means high energy consumption. Meanwhile, GPUs produces lots of heat when working so a cooling system is usually required. This further increases the energy consumption. Unlike gaming PCs, GPU mining rigs usually incorporate multiple GPUs working together, and some miners may use multiple GPU mining rigs. A report by Bloomberg suggested that cryptocurrency miners spent $15 billion on GPUs during the cryptocurrency mining craze since 2021.[9] Meanwhile, statistics suggested that 67% of the electricity powering Bitcoin mining during 2020 and 2021 was generated by fossil energy and that Bitcoin mining produced more than 85.89 metric tons of CO2 during that period.[10]

Market Impact

As miners rushed to stock GPUs, the GPU mining craze disrupted the GPU market. Around 2013 and 2017 respectively, the prices of GPUs skyrocketed amid GPU mining craze.[11] Gamers were founding themselves increasingly difficult to purchase the ideal GPUs they wanted for their games, and this worldwide shortage of GPUs continued into 2021 and did not end until 2023.[12] [13] In the meanwhile, as miners rushed to update the latest GPUs to enhance the computing power, old and used GPUs flowed to the market, many of which were refurbished and then sold as new GPUs.[14]

Profitability

The profit of GPU mining depends on many factors. The first is the amount of cryptocurrency rewards that can be acquired. Take Bitcoin as an example. Its system is pre-programmed to halve the Bitcoin rewards offered every four years or after every 210,000 blocks mined.[15] While the original block reward was 50 bitcoins per block, it has decreased to 6.25 bitcoins every block in May 2020.[15] The next halving is scheduled to happen around late April 2024.[16] The second is the costs induced or related to GPU mining, including the expenses used to purchase and maintain the mining rigs and the electricity costs. While bitcoin rewards per block have decreased, GPU prices have also dropped from the high point.[17] Meanwhile, many inefficient or unprofitable mining farms are also being closed. Different regions are subject to different electricity prices. It is still hard to lay a solid conclusion as to whether GPU mining is still profitable at present.

GPU Mining vs. CPU Mining

While central processing units (CPUs) were used to mine cryptocurrency like bitcoin in the early days, they were gradually replaced by GPUs. This shift was because mining Bitcoin became more and more difficult as more and more people join the mining craze. The system was designed to automatically adjust the difficulty level of solving the cryptographic problems every 2,016 blocks or around every fortnight.[18] As the cryptographic problems become more and more difficult, greater computing power is needed. As a result, CPUs were gradually replaced by GPUs because the latter are more efficient in mining.

History

  • In October 2010, Graphics Processing Unit (GPU) mining devices first came about. [19] This was made possible with the creation of Bitcoin mining software for GPUs that configure GPUs for the mining activities. [20]
  • 2010-2011: the GPU era in cryptocurrency mining.[21]
  • June 2017, Hong-Kong based Sapphire Technology became the first firm that produced GPUs tailored specifically for GPU mining. Many of the GPUs did not have display functions and could only be used for mining.[22] Other leading GPU producers such as Asus and Nvidia also announced their plan to produce GPUs made specifically for mining.[23]
  • Around 2013 and 2017 respectively, the prices of GPUs skyrocketed amid GPU mining craze. [11]
  • In May 2021, China officially banned all crypto mining including GPU mining, amid concerns for the environment and economy. [24]
  • In September 2022, Ethereum finished the transition from “Proof of Work” to “Proof of Stake” algorithm, which made it impossible for using GPUs to mine cryptocurrencies. [25]

References

  1. ^ McFadden, Christopher (2023-03-13). "GPU mining 101: a short guide on crypto-mining using graphics cards". interestingengineering.com. Retrieved 2024-01-29.
  2. ^ Connolly, Peter (2022-04-26). "Introduction to GPU mining". Learn Bitcoin & blockchain. Retrieved 2024-01-29.
  3. ^ "Hash Rate". Binance Academy. Retrieved 2024-02-20.
  4. ^ Harper, Christopher (2022-04-20). "Do Nvidia's LHR "Lite Hash Rate" GPUs Perform Worse?". CGDirector. Retrieved 2024-02-20.
  5. ^ Shuaib, Mohammed; Badotra, Sumit; Khalid, Muhammad Irfan; Algarni, Abeer D.; Ullah, Syed Sajid; Bourouis, Sami; Iqbal, Jawaid; Bharany, Salil; Gundaboina, Lokesh (January 2022). "A Novel Optimization for GPU Mining Using Overclocking and Undervolting". Sustainability. 14 (14): 8708. doi:10.3390/su14148708. ISSN 2071-1050.{{cite journal}}: CS1 maint: unflagged free DOI (link)
  6. ^ Network, Phala (2021-08-01). "Reading | The Evolution of Mining: CPU, GPU, ASIC… Phala". Phala Network. Retrieved 2024-01-30.
  7. ^ a b Lewandowski, Jerzy (2023-10-22). "How bad is mining on a GPU?". TechThis.pl. Retrieved 2024-02-20.
  8. ^ "What Is Proof Of Work? – Forbes Advisor". www.forbes.com. Retrieved 2024-02-20.
  9. ^ Mujtaba, Hassan (2022-06-19). "Crypto Miners, Not Gamers, Were The Primary Buyers of Graphics Cards Since 2021, Almost $15 Billion Worth of GPU Sales Reported". Wccftech. Retrieved 2024-02-20.
  10. ^ Chamanara, Sanaz; Ghaffarizadeh, S. Arman; Madani, Kaveh (24 October 2023). "The Environmental Footprint of Bitcoin Mining Across the Globe: Call for Urgent Action". Earth's Future. 11 (10). doi:10.1029/2023EF003871. ISSN 2328-4277.
  11. ^ a b Joel, Hruska. "Cryptocurrency Craze Sends GPU Prices Skyrocketing -- Again". Extremetech.
  12. ^ "The GPU shortage is over, but it's still wreaking havoc". Digital Trends. 2023-12-20. Retrieved 2024-02-20.
  13. ^ Brown, Abram. "The War Between Gamers And Cryptominers—And The Scarce Global Resource That Sparked It". Forbes. Retrieved 2024-02-20.
  14. ^ published, Jorge Jimenez (2023-01-26). "Oh great, crypto miners are selling repainted GPUs and passing them off as new". PC Gamer. Retrieved 2024-02-20.
  15. ^ a b Singh, Navdeep (2024-02-19). "Understanding Bitcoin Halving: A key event for Bitcoin investors". The Economic Times. ISSN 0013-0389. Retrieved 2024-02-20.
  16. ^ Binge, Bitcoin (2024-01-02). "Is 2024 an Nvidia Moment for Miners?". Coinmonks. Retrieved 2024-02-20.
  17. ^ "Is Bitcoin Mining Profitable in 2022 – Forbes Advisor". www.forbes.com. Retrieved 2024-02-20.
  18. ^ Sigalos, MacKenzie (2021-08-13). "It just got harder and less profitable to mine for bitcoin as algorithm adjusts". CNBC. Retrieved 2024-02-20.
  19. ^ Kim, Christine (2020-04-26). "The Rise of ASICs: A Step-by-Step History of Bitcoin Mining". www.coindesk.com. Retrieved 2024-01-29.
  20. ^ Bedford Taylor, Michael (2017). "The Evolution of Bitcoin Hardware". Computer. 50 (9): 58–66. doi:10.1109/MC.2017.3571056. ISSN 0018-9162.
  21. ^ ASICs, Linzhi (2019-11-15). "History of Bitcoin Mining Hardware". Medium. Retrieved 2024-02-20.
  22. ^ published, Paul Lilly (2017-06-26). "Sapphire is first to market with graphics cards specific for mining". PC Gamer. Retrieved 2024-02-20.
  23. ^ Haig, Samuel (2017-06-28). "Asus and Nvidia Announce Purpose-Built Cryptocurrency Mining GPUs". Bitcoin News. Retrieved 2024-02-20.
  24. ^ "Bitcoin mining is worse for the environment now since China banned it". euronews. 2022-02-26. Retrieved 2024-01-29.
  25. ^ "GPU Mining for Ethereum Ends as 'The Merge' Completes". PCMag Australia. 2022-09-15. Retrieved 2024-01-29.
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