GPU Mining: Everything You Need to Know

GPU mining is this process where people who have mining systems that work through a graphics processing unit (GPU) can solve a complex map problem, which has the intention of solving and verifying electronic transactions. Miners that decide to participate can create digital coins, or get paid for the processing power itself.

Crypto-mining originated with the creation of Bitcoin from an individual or a group of people known as Satoshi Nakamoto.

Aside from GPUs, cryptocurrencies can be mined with application-specific integrated circuits or ASIC, a central processing unit or CPU, but today we will be exploring exactly how the GPU mining process works, and why a lot of miners tend to prefer it over its counterparts.

But to get a clearer understanding of how all of this actually works, we’ll first have to look at exactly how GPUs work.

GPUs (Graphics Cards) Explained

Graphics Cards (GPUs) is an expansion card for your computer that is typically responsible for rendering the images which are showcased on your computer monitor or display of any kind. Higher-end GPUs which are used for gaming have increased features that make them stand out a bit, such as ray tracing, and these are most commonly used for cryptocurrencies due to their power.

A graphics card is similar to a motherboard, where it has a printed circuit board, its own processor, RAM, and other components, making it one of the most complex parts of any computer. It’s referred to as a graphic processing unit, however, a GPU is just a part of the graphics card itself.

There is a total of two types of GPUs, including an integrated GPU and a discrete GPU.

The internet GPU is a graphics processing unit that’s pre-built into the processor (CPU) itself, and it cannot really be upgraded as a result. This type of GPU has found common ground on many business laptops and tablets, and many cheap computers out there typically do not come with a dedicated graphics card.

That being said, discrete GPUs are separate GPUs specifically made to serve this purpose. They are mounted on the motherboard and typically have their own slot. You can even add two or even more of them through what is known as SLI (Nvidia) or Crossfire (AMD), where you can change or remove the card at any time, and upgrade it when a new one gets released.

A large number of the graphics cards we see in most modern gaming PCs are sophisticated devices that are like mini-computers themselves and are the driving force in both gaming, and GPU mining.

This is the case due to their ability to perform a large number of calculations, from drawing anything you see to generating realistic 3D graphics and ray tracing in real-time.

Nvidia and AMD are currently making the majority of graphics cards, however, more and more companies are starting to sink their teeth in the industry. That being the case, Nvidia and AMD are the dominant forces at the moment and are in a constant battle to pump out more graphics cards.

Furthermore, GPU mining takes advantage of some of the highest-end graphics cards out there, and these are found in gaming machines. The most commonly mined cryptocurrencies include Bitcoin and Ethereum.

GPU Mining Explained

Discussing GPU crypto mining, it is the process of making physical computer hardware, most commonly being gaming GPUs or graphics processing units, do mathematical calculations for the blockchain of a specific cryptocurrency, that uses Proof-of-Work (PoW) as its consensus mechanism. This confirmation of each data block that gets recorded on the blockchain is done through mining, where the miners are rewarded for their services with cryptocurrency that is native to the blockchain. So, for example, on Ethereum you’d get ETH (Ether), and on Bitcoin, you’d get BTC (Bitcoin).

Keep in mind that the mining process itself is specialized and extremely competitive, so given that fact, the rewards are divided into exactly how much calculation is done. Mining is a distributed consensus system, and this system is used to actually confirm the pending transactions by including them on the blockchain itself.

Another benefit of this mining process is the fact that it enforces a chronological order in the blockchain itself. As such, it protects the authenticity and neutrality of the networks. This is because each and every node (miner) has access to the blockchain and has to agree on the state of the system.

Each confirmation needs to occur through packing these transactions into blocks, and these fit specific cryptographic rules. These are then verified by the network.

For someone to successfully change a previously generated block on the blockchain for malicious means, they would need to control more than 51% of all of the computers that run the blockchain.

What Miners Actually Do

By this point, you have an idea of how GPU mining works, but let’s take an in-depth look at how all of this plays out.

You see, miners verify the legitimacy of the blockchain transactions themselves. In other words, they get paid for solving cryptographic puzzles by taking advantage of GPU hardware. The rewards are used to incentivize the miners to carry on their work and remain fair. By verifying each transaction, the miners can prevent the double-spending problem.

This is an issue where a Bitcoin owner, for example, could spend the exact same Bitcoin balance, twice. To combat this, miners check the transactions and ensure that the user has not illegitimately tried to spend the Bitcoin they have previously spent, yet again.

Once the miners verify the 1 MB block of data through the usage of their GPUs as a transaction, the block itself is formed and added to the blockchain, however, it is now fully confirmed for its authenticity. Once this process is completed, the miner is rewarded, in the case of Bitcoin, with BTC.

This 1 MB limit is set by the creator of Bitcoin specifically, Satoshi Nakamoto, and differs throughout other blockchains, however, we are using it as an example due to its simplicity in this regard. Only through completing the verification process of this 1 MB worth of transactions can a miner be eligible to actually be rewarded in BTC, which means that not every miner who attempts this can get paid out.

In other words, mining relates to this utilization of the processing abilities of a GPU to solve hashing blocks and validate the transactions on the blockchain itself. The blockchain is just this public ledger, and it stores all of the information about each of the transactions. Whenever a miner begins this mining process, the hardware used for mining has all of the information from the blockchain network.

Then, it performs the processes on this network, which are known as hashing or Proof-of-Work (PoW), where the GPU computing power is used to solve complex mathematical problems, where the miner can earn a reward.

Using a GPU, as a miner, is the means through which the calculations of the transactions can occur, and this is recorded onto the blockchain itself. Going forward, this record of retired transactions can resemble a chain of blocks, in a digital form, which can confirm the transaction to the rest of the chain, which provides authenticity that the transaction actually happened, solving that double-spending problem.

That being the case, mining is also used as a method to disperse new digital currencies onto the network, and miners get compensated for any transaction fees that occur as well as the bonus for the created coins throughout the process for each of the properly hashed blocks that are added.

This allows for the distribution of new coins through decentralized methods and motivates miners to actually provide security to the network with the initiative of acquiring these rewards. This leads to the fact that the more users who end up joining the network, the rate at which the block generation occurs will get increased.

Over time, this rate can expand and become more difficult to counterbalance, which then pushes the rate of block production down.

The mining network difficulty is measured by how difficult it is to solve the cryptographic puzzles that need to be solved in order to generate a new block. This difficulty re-adjusts itself after a number of blocks have been mined, and this varies depending on the blockchain being analyzed.

Bitcoin Mining Difficulty for GPU Mining
Source: – Bitcoin Mining Difficulty for GPU Mining

The main reason miners select GPUs over CPUs is due to the fact that they are much more efficient at mining coins, due to their architecture design. GPUs are engineered for rendering graphics and have a lot more power as a result. In fact, they are capable of carrying out computational duties’ in large quantities at a time. 

Mining rigs that feature a large number of GPUs stacked on a rack of sorts are specifically built devices that are intended to serve their purpose this way. A mining rig is a computer system made to mine cryptocurrency.

Keep in mind that mining rigs do not have to specifically be made for mining, but any gaming computer can be used to mine for cryptocurrencies, which gamers typically do to earn a little bit of side-income while they are not using the GPUs for gaming.

SHA-256 Explained

When it comes to the complex algorithm that all of these GPUs are trying to solve, it is the SHA-256 hash function in most cases. In other words, the computer takes the Sha-256 algorithm and turns it into an output. This output is a 256-bit number.

Hash functions have this power due to the fact that they are only one-way functions, which means that it is possible for just about anyone to use the hash function to produce an output when they are given an input, however it is impossible to use the output of the hash to reconstruct the input. This powerful feature of the SHA-256 hash function is one of the main reasons it is used in blockchain networks such as the Bitcoin network.

When it comes to the Bitcoin blockchain specifically, it is used for mining as well as the creation of Bitcoin addresses. The mining process itself is the way through which new coins are created into the existing circulation of the Bitcoin protocol, and as a means to secure the blockchain.

We previously discussed the 1 MB blocks that needed to be solved (mined) in order for them to be added to the blockchain, and in order for the miner to be rewarded.

These blocks need to include a total of 6 parameters, all of which are intended to be filled by the miner.

  • Version
  • Previous Block Hash
  • Merkle Root
  • Timestamp
  • Target
  • Nonce

When it comes to the creation of bitcoin addresses, in order to produce a Bitcoin address, a private key that is a randomly selected number is multiplied through the usage of an elliptic curve to produce a public key, and this key is then put through both the SHA-256 and the REPEMD160 hashing algorithms.

What this results in is a public key that is 256 bits long, and a Bitcoin address that is 160 bits long.

Other Mining Algorithms

Of course, you don’t only have one algorithm, as there are many blockchains out there, and some of these use specific algorithms of their own.

Let’s look at the Scrypt algorithm as the next example, as this one Is used by Litecoin (LTC) as a less power-demanding alternative. This is the case due to the fact that the Scrypt algorithm can be solved a lot more quickly, and the hash rate is measured in kilohashes (KH/S). It essentially runs on password-based key functions that were created for the Tarsnap online backup service. It creates pseudorandom numbers that are stored in RAM locations, and this makes it impossible for hardware attacks to be performed on the network itself.

Then you have the X11 algorithm, which is one of the most efficient ones for GPUs out there, where the GPU can run on 30% less wattage in order to mine. It’s measured in megahashes (MH/s), and it can be found in cryptocurrency networks such as XCurrency (CS), Dash (DASH), and StartCoin (START).

The Bottom Line

With all of this said and done, hopefully, now you have a bit more of a perspective at exactly how GPU mining works, and what to look out for the next time you decide to start your crypto-mining process. Keep in mind that the industry has its risks, and is extremely volatile, so only attempt it at your own risks. As time evolves, many of these graphics cards, programs, and coins will evolve as well, and new, better ones will surely replace them, however, for the time being, this is the best you have to work with, and hopefully, this information assists you going forward.

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