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This is the second part in a 4 part series discussing the current state of bitcoin mining:
- What is bitcoin mining?
- The evolution of mining
- Current ASIC Hardware
- Bitcoin mining – public companies
There have been four significant phases of mining since Bitcoins inception on January 3rd, 2009: personal computer’s processors (CPU), graphics cards (GPU), programmable cards (FPGA), and ultimately fully customized circuits (ASIC). We’ll discuss these in context of the bitcoin eco-system, and as a preface for our next two sections on ASIC hardware options, and mining companies. The measurement of a hardware’s ability to hash bitcoin blocks is measured in units of hashes per second. As software and hardware got more sophisticated, this was later measured in MegaHashes per second (MHash/s) or GigaHashes per second (GHash/s)
Central Processing Units (CPU)
When Satoshi Nakamoto created the Gensis Block in 2009, he was hashing on his computer’s CPU. After some software refinement, a typical Intel processor was able to generate 20-40 MHash/s. This was more than sufficient to net early miners 10’s to 100’s of bitcoins per day while casually running the software on their personal computers. CPUs are designed to perform complex operations serially (in order one after the other), and are not ideally suited for the relatively simple task of hashing blocks
Graphic Processing Units (GPU)
GPUs – to over-simplify a bit – are designed to create a large number of polygons on your screen quickly. These calculations are relatively simple to perform, leading GPU architecture to be optimized for a large number of simple processes calculated in parallel (simultaneously). Developing mining software for the GPU became the logical next step. This idea was first proposed in December 2009 on the bitcoin forum, almost a year after Genesis. Surprisingly, Satoshi urged users to avoid GPUs for some time:
The average total coins generated across the network per day stays the same. Faster machines just get a larger share than slower machines. If everyone bought faster machines, they wouldn’t get more coins than before.
We should have a gentleman’s agreement to postpone the GPU arms race as long as we can for the good of the network. It’s much easier to get new users up to speed if they don’t have to worry about GPU drivers and compatibility. It’s nice how anyone with just a CPU can compete fairly equally right now.
It would appear that this agreement was upheld for a year, until September 18, 2010 when the first publicly available GPU mining software was released. Most likely, there were private versions being used for several months before that, but it was not until this public release that GPU mining dominated the market.
Because of a difference in architecture (mostly a fluke in design), AMD GPUs were able to run more the 10x as fast as NVIDIA and became the go-to card for bitcoin miners for years. Typical AMD cards were able to run at 300-400 MHash/s, making CPU mining obsolete.