Last updated on July 27th, 2016 at 08:48 pm
If you have been following Bitcoin, then you have most likely heard of the term Bitcoin mining. Just in case you don’t know or remember how Bitcoin mining works, we will offer a very quick refresher. Then, we will get into some of the details behind Bitcoin mining rigs, which are used to create Bitcoins.
Basically, Bitcoin mining works by solving complex equations as determined by the underlying source code that empowers Bitcoin. Once the equation is completed, a “block” of information is added to the blockchain. The block chain contains information regarding transactions and trades. In exchange for producing this block, the Bitcoin miners who completed the work are rewarded a set of Bitcoins (currently 25).
As time goes on Bitcoin mining becomes more difficult. In short, the equations that must be solved in order to unlock a block increase in difficulty. This means you must use more computing power and electricity to mine Bitcoins. In the beginning a person with a decent laptop could mine Bitcoins all on his own. Now? Many companies are investing tens of thousands of dollars on specialized Bitcoin mining rigs. Despite their high price tag, these rigs could turn out to be a great investment if Bitcoin prices remain high.
Also before we jump into mining rigs, there are two concepts you need to understand. Hash rates (Mhash/s) refers to how quickly a computer can try to solve the Bitcoin equations. The higher the number, the better. Mhash/J is a term used to basically measure how much electricity a rig consumes while “hashing”. The lower the number, the better.
Present and Future Bitcoin Rigs
The most well-known Bitcoin mining rig manufacturer is arguably Butter Fly Labs. They are now producing some of the most advanced ASIC mining rigs available. Working under the brand “Bitforce”, Butterfly labs has the ambitious goal of launching a 1.5 Mhash/s rig, the BitForce Mini Rig ‘SC’, that would literally blow away the competition. Still, this rig has yet to leave the development stage and comes with a price tag of nearly $30,000. Energy consumption at this moment is unknown. Currently, Butterfly lab’s most powerful unit that is shipping is the BitForce SC 5Gh/s. This rig has a Mhash/s of 5,000 and Mhash/J of 166. These are respectable numbers, but not industry leading by any measure. Still, this unit ships for only $275, making it a good deal.
The most powerful rig currently shipping is the Avalon Avalon ASIC #1. This rig has a Mhash/s rate of 66,300 and a Mhash/J rate of 107. At $1,300, this rig seems like a pretty respectable buy. If you are looking for a more energy efficient unit, the Avalon Avalon ASIC #2 holds an industry leading Mhash/J of 107, though it’s a bit slower with a Mhash/S rate of 60,000. You will also have to pony up a bit more money for the $1,500 price tag.
KNCminer is promising to launch their “Jupiter” rig in September. This unit will support some pretty serious power. With a Mhash/S rate of 350,000, the Jupiter will easily beat out Avalon’s rigs. The rig won’t be cheap with a price tag of nearly $7,000. The KNCminer Saturn will have a Mhash/S rate of 175,000 and sell for “only” $3,695. Either way, if KNCminer delivers on their promises, look for this company to become a major player.
The challenges of Bitcoin Mining Rigs
Bitcoin mining rigs face many challenges. For one, Butterfly Labs and other companies have repeatedly failed to meet their milestones in terms of both hardware efficiency and power, and also launch dates. You should keep this in mind, especially if you are looking to put down a deposit on a forthcoming mining rig. In short, what you sign up to buy, might not ultimately be what you get.
Also, you should be aware that Bitcoin mining rigs are basically good only for Bitcoin mining. If you buy a Bitcoin mining rig and the currency suddenly collapses, your investment will likely be lost. Practically speaking, you won’t be able to repurpose the rig to do anything else, at least not in economic terms. Of course, conditions can change, but this is a risk you should seriously consider before investing thousands of dollars on a mining rig. We don’t mean this to sound overly pessimistic, but we also want to be honest and let you know what you are signing up for. Bitcoin mining is a high risk investment. If your investment turns out well, you could stand to make huge returns. On the other hand, if things head south you could lose a lot of money.