Mining is the process of solving blocks in the block-chain that is the backbone of the whole Bitcoin network. Without mining, the network wouldn’t be what it is today, nor would it be able to properly function.
Mining requires a lot of intense calculations to be conducted by computer hardware in order to determine the validity of the transactions in a certain block. Every block comes with its own mathematical problem that has to be solved and the prize goes to the miner (or group of miners) who manage to solve it first.
In the beginning, bitcoin mining hardware was fairly simple as people used their normal computers and CPUs in order to make the computations.
However, the bitcoin difficulty (the difficulty of the problems that have to be solved) increases in order to make sure that the blocks aren’t being solved too quickly (an average speed for solving a block is about 10 minutes and this is how it’s supposed to stay).
Thus, the adequacy of the CPU (central processing unit) wasn’t enough at one point, but people discovered that GPUs (graphics processing unit) are much better suited for the job of the bitcoin miner.
In particular, AMD GPUs were considered superior to NVidia, and HD5870 series was considered one of the most cost-effective. Bitcoin mining rig setups were based around multiple GPUs. Since they consume a lot of power, they heat up quite quickly and many of them weren’t held in normal PC cases, but beer cases and other make-shift casings.
The main idea behind bitcoin mining hardware is that it’s dedicated the mining software non-stop without any downtimes. This means that the required power is quite significant and a good PSU (power supply unit) is needed.
Good cooling is also required. All of this worked for a time, but was soon not enough – too much power was consumed for too little result, and the heating problems couldn’t be solved easily. Hence the bitcoin mining hardware setup had to evolve.
Enter ASIC bitcoin miner! Bitcoin mining rig ASIC (application specific integrated chips) hit the market once the bitcoin mining hardware GPU was no longer enough. The complexity of the problem called for a dedicated software that was designed specifically for this purpose.
The investment in a specialized bitcoin mining hardware setup is worth it for some people but it’s too great a risk for others – it’s up to you to figure out which group you fall into.
The cost of the hardware is taken into consideration when using a bitcoin mining calculator. The upside to the specialized hardware is that you can compare bitcoin mining rig specs directly. For more information, you can check a bitcoin mining rig wiki.