Technology

Why GPU Is So Important In Crypto Mining – 2021 Guide

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Written by Quentin Hack

Cryptocurrencies were a taboo subject for a long period. However, in the last five years, people would gladly accept to invest their money in Bitcoin and other altcoins. Of course, you will hear some people saying only negative stuff about digital currencies. That is the reason why beginners often get confused. The source of reliable pieces of information is everything they need. If you are one of them, you have come to the right place.

There are two different ways of how you can earn money with virtual currencies. The more popular way is trading, but many people still do not know how to buy digital currencies. Of course, Bitcoin seems like the most attractive to them. Because of that, you can check websites like mentalitch.com and gather valuable pieces of information. It is an excellent place to start your crypto trading journey.

On the other hand, people can also try out to improve their financial stability with crypto mining. In that case, making the first steps is a bit different than that. The first thing you should get familiar with is the importance of GPU. More precisely, you need to discover why GPU is so important in crypto mining. We will start explaining things from the very beginning.

First of All – What Is GPU?

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GPU stands for the graphics processing unit. It is a piece of hardware that allows you to govern the video rendering system of the device you are using. Thanks to GPU, your CPU is not going to take care of different visual effects and 3D-graphics. However, when we talk about mining, GPU is essential in some different way, and that part deserves an explanation.

GPUs In Crypto Mining

As you know, digital currencies are digital entities. The people that generate them through the mining process are known as miners. It would be unfair to say that mining is a simple process. Mining itself requires different math-solving skills that will allow you to develop a cryptocurrency unit. Despite that, you will also manage to power the encryption with the same skills.
Another thing you should know is related to cryptocurrency denomination. Each one comes with a limit of the tokens its issues. When you start a mining process, you can create only one coin at once. Because of that, the ceiling for available coins drops. Whenever you need to create a new one, your duty will be to solve a new mathematical formula. That is the moment when things become more challenging.

We will use the most popular digital currency in the world to make things clear. Bitcoin requires highly difficult mathematic operations and procedures. Despite that, it also requires a huge amount of processing and electrical power. That is the reason why you can’t become a miner if you don’t have the necessary equipment. Purchasing the correct GPUs is going to bring the necessary costs you will have to pay. However, that is a long-term investment, and you should not avoid crypto mining because of that.

Of course, the GPU you will have to use is not always the same. It depends on the digital currency you plan to mine. For example, if you decide on Ethereum, the computing power for mining you need is less demanding. More precisely, in that case, using only the CPU is going to be enough.

The purpose of the graphics processing units is to support repetitive tasks like rendering scenes that have high demands. They come with a big number of so-called Arithmetic Logic Units that are precisely designed for that purpose. That is the main reason why GPU is essential for crypto mining.

Supply and Demand Are Growing

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Logically, the popularity growth of digital currencies has also influenced the mining industry. Companies as well as individuals are looking to find the best graphics cards on the market that will allow them to defeat their competitors. Despite that, they will also ensure financial stability in that way. That is the reason why we now have a wide range of GPUs on every corner that are becoming more expensive each day.

The same effect of increased supply and demand is noticeable since 2014. For a short period, the prices of all GPUs jumper for two times. The same rule counts for less and more expensive on the market. A good example of that is Nvidia GeForce GTX 1060 graphic card. The Ethereum miners are using that GPU actively. Believe it or not, for only one year, the price of one GPU jumped from around $50 to $250. You now see why many people say digital currencies influenced all aspects of our lives.

Things to Consider before Purchasing a GPU

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Your GPU needs to be suitable for your rig equipment. That is the reason why you should not purchase the first one you can find on the market. There are a couple of things to consider before purchasing a GPU. We will highlight the most essential ones.

The first thing you should put into consideration is the price. That will allow you to make the proper calculations and determine the potential of your GPU. You can check the ratio with some other criteria that we will describe in the further text.

One of the things you will also need to have in mind is the hash rate. That feature tells you how many hashes your GPU can express for one second. In other words, it shows you how quickly your GPU can generate the mining power necessary for writing a block in a blockchain.

The third thing you need to consider is electricity. Electricity will bring you the biggest costs of all. That is the reason why it is an essential factor you should put into consideration before spending your money on creating effective rig equipment. Keep in mind that not all graphic cards are optimized for mining. Because of that, they will often spend a lot of electricity. That will directly influence your profit. The goal of all miners is to mine without making high electricity bills. Your goal should be the same.

About the author

Quentin Hack