Build a bitcoin mining rig

Inside the Race to Build the World’s Fastest Bitcoin Miner

Avalon Asics CEO Yifu Guo. Photo: Alec Liu

There’s more than one way to make money from the Bitcoin craze, which has seen the value of the digital currency increase more than six-fold over the past few months. You can do it the old-fashioned way: buying low and selling high. But for the sophisticated digital-currency investor, there’s a whole other world of Bitcoin speculation: the Bitcoin mining rig.

Like the currency itself, this strangely lucrative game is heating up — in a big way. One mining rig — available for preorder at a cost of about $1,800 in February — is now selling for more than $22,000 on eBay. And it hasn’t even shipped yet.

Over the past year, a handful of companies have raced to build a new generation of computers that are specifically designed to mint digital money, and many speculators across the Bitcoin world are dying to get their hands on the latest hardware. This week, one of these companies, Butterfly Labs, is finally shipping its first custom-designed machines, six months behind schedule.

If Bitcoins are the fiat currency alternative for techno libertarians, then Bitcoin miners are the digital mint operators who keep the whole thing running. Bitcoin transactions are not registered with any central bank or brokerage firm or website. They’re logged by a peer-to-peer network of computers. These computers keep track of who’s transferring Bitcoins to whom, and then — every 10 minutes — they enter a kind of cryptographer’s lottery, with the winner getting paid 25 Bitcoins for their work. That’s how new Bitcoins get into the network. It’s also how the Bitcoin miners earn their keep.

For Bitcoin miners, the name of the game is cryptography. And the lottery ticket is a hash — a number that represents a big bunch of data and is created via cryptographic algorithms. If one miner — or a group of miners — can take the transactions on the Bitcoin network and convert them into more cryptographic hashes faster than someone else, they have a better chance of winning that 25 Bitcoin payout. As Bitcoins have skyrocketed in value, the Bitcoin miners have been throwing more and more computing power onto the network.

When Bitcoins were first introduced, you could win the hashing lottery with a regular old personal computer. Now that’s pretty much impossible. In fact, it now takes about 9 million times as much processing power to produce Bitcoins as it did in the beginning. So, for any Bitcoin miner to have a reasonable chance of winning, they have to seriously up their game.

That’s where the new mining gear comes into play.

In the past year, three companies, Butterfly Labs. Avalon Asics. and Asicminer led a race to produce a new generation of computers built with custom-designed chips (they’re called ASICS: application-specific integrated circuits) that do nothing but create tickets for the Bitcoin mining lottery.

You plug one of these machines into your computer, run special mining software, and sit back and wait for the Bitcoins. But they’re so powerful that they’re making things harder for other miners. “The difficulty has been skyrocketing lately as these ASICS have been coming online,” says Gavin Andresen, chief scientist with the Bitcoin foundation.

Last summer, Bitcoin miner Scott Novich bet on Butterfly Labs. It seemed like a reasonable bet at the time because Butterfly had already shipped specialized Bitcoin mining rigs that, when pooled with other miners, were cranking out an average of four to six Bitcoins per month for Novich, a graduate student at Rice University. Butterfly had the best reputation; it had shipped well regarded mining rigs in the past. And its miners — which look like stretched out versions of the Roku media player — simply looked cool.

So last July, Novich and a few friends shelled out an advance payment of about $1,200 for a Butterfly miner that the company said would be able to perform more than 60 billion hashes per second. His current mining rig performs 750 million hashes per second.

The Butterfly gear was supposed to ship by November. Today Novich is still waiting.

The problem was that Butterfly — based out of Kansas City, Missouri — banked on a cool design and a brand new chip manufacturing process and ended up getting in over its head. “We’ve hit quite a few snags along the way, says Butterfly Chief Operations Officer Josh Zerlan.

The company had to redo its initial chip designs, but the worst snag was in November, when the Butterfly got a hold of its first chip samples. They were basically too hot to work, Zerlan says. “The plastic packaging on the top of the chip just couldn’t exhaust the heat fast enough, so it basically melted the package.”

A Butterfly miner (Photo: Butterfly Labs )

Forget Mining BITCOIN, Start MINING LITECOIN with Home Built LITECOIN MINING RIG

And so, with customers growing angrier by the day, Butterfly was soundly beaten in the great Bitcoin mining race by Avalon Asics. Avalon used a less-cutting-edge chip manufacturing process, and it didn’t pay too much attention to aesthetics, but it managed to ship out its first boxy, 67 Gigahash units back in February.

To hear CEO Yifu Guo tell it, Avalon won because they bet everything on a network of friends, college buddies, and acquaintances in China — who helped them build their first 300 systems in four months. After spending September and October last year working with “friends or people that were really smart” designing the systems, Guo flew to Shenzhen, China, where he spent another two months negotiating with the suppliers who would help him build his Bitcoin mining machines.

Guo called on his network to lend him cars, to introduce him to parts suppliers, even to ship packages. Avalon had sketched out the chip in the U.S. but it then paid (using Bitcoins, natch) a group of engineers at a Chinese computer company to build out the chip’s design using specialized chip-making software that created specifications that the chip’s manufacturer, Taiwan Semiconductor Manufacturing Company, could actually use.

“Nothing happens in Asia if you don’t know somebody. It doesn’t matter how much money you have,” Guo says. “That’s really what it came down to.”

Those folks who’ve been lucky enough to get their hands on one of these early Avalon systems are cleaning up. Miner Jeff Garzik was the first person to take possession of a Avalon machine. Last year, he plunked down preorder money for a variety of custom ASIC rigs, including $1,300 for his Avalon system. “At the time, it was a very risky bet,” he said in an email interview. “None of the ASIC vendors were shipping, and all were funding their efforts through a pre-order model, akin to Kickstarter. This meant any buyer was paying months in

advance for hardware that did not exist, and not even a guarantee of a refund upon failure.”

But Garzik’s Avalon bet paid off. Big time. He got his system the end of January. Within 20 hours, it had earned him nearly 15 Bitcoins. Today it cranks out just under 4 Bitcoins per day. That’s about $500 at current Bitcoin exchange rates. “The first mover advantage is enormous,” Garzik said in an email interview.

Avalon expects to ship another 1,200 rigs within the next month.

Until this week, Butterfly customers like Novich had been left on the sidelines, watching the compute power on the Bitcoin network rise up, day by day, while they waited.

Butterfly’s Zerlan says the experience has been “very painful” and some customers are extremely angry. But reviewers and first-in-line customers are finally getting their hands on Butterfly’s systems. Zerlan says that customers will still be able to make money mining Bitcoins. It will just take more time.

But with each new computer that ships, and each new adventurer that gets into Bitcoin mining, the bar is getting higher. Butterfly has already taken thousands of orders for the new systems. And Asicminer, which is both selling its own custom-designed machines and mining the Bitcoins itself, has already brought new custom ASIC systems to play.

So a year from now, the 750 megahash mining rig that Scott Novich is running at home may not be worth the power it sucks up. It really depends on how much a Bitcoin is worth in 2014. And that’s anyone’s guess.

Robert McMillan is a writer with Wired Enterprise. Got a tip? Send him an email at: robert_mcmillan [at] wired.com.

Litecoin 101: How To Build Your Own Mining Rigs

UPDATE 2: I’ve recently switched my mining hardware to Dogecoin due to its rising popularity and lower difficulty. I’ve found it to be more profitable, and it may be worth pursuing depending on your specific situations.

We’re still not even sure who created Bitcoin, the first cryptocurrency to go mainstream. Its value is erratic, swinging dramatically up and down within weeks. We don’t know who will adopt or condemn it next, but one thing is certain: This new form of decentralized currency is resilient, and you can mine it, trade it, and sell it using nothing more than off-the-shelf PC parts geared toward gamers.

Former Google employee Charlie Lee, Litecoin’s creator, refers to it as “silver to Bitcoin’s gold.” His intent was to improve on Bitcoin and, in the process, make it more accessible and obtainable. Indeed, Litecoin can be “mined” by off-the-shelf PC components typically snatched up by gamers.

The Forbes E-book On Bitcoin Secret Money: Living on Bitcoin in the Real World . by Forbes staff writer Kashmir Hill, can be bought in Bitcoin or legal tender.

But if you’ve been drawn in by the headline, you’re not here for a history lesson. You’re here to jump into the Litecoin mining pool. With that in mind, I’m going to present two distinct PC builds focused exclusively on Litecoin mining and explain some of the basic requirements and best practices along the way.

First, let me qualify myself: I’ve been mining 24/7 for the past two weeks; not long, but obsessively. I’ve scoured dozens of forums and Reddit threads for answers and engaged in a lot of trial and error. I’ve successfully turned what I instinctively viewed as “funny money” that existed in an encrypted digital Litecoin wallet into actual $USD deposited into my checking account. If it’s impossible to wrap your head around that, you’re not alone!

Next, I’m going to caution you: Like playing the stock market or investing in general, there is a risk associated with Litecoin mining. Cryptocurrency is decentralized and unregulated. It’s volatile, and there are significantly less experts in this realm to advise you. While I can’t recommend what’s best for you, I will share that I have three dedicated Litecoin mining rigs running at home. I believe in its long-term value.

If you’re not comfortable assembling your own PC, there are a wealth of people on eBay willing to charge you an exorbitant amount of money for the opportunity. If you want the satisfaction and inherent pride in doing it yourself, NewEgg has an excellent video tutorial here. Or you can leave a comment and I’ll do my best to lend an assist.

Finally, make sure to subscribe to the RSS feed of this blog, follow me on Facebook, or just keep your eyes on Forbes Tech. This guide will be published in multiple parts; we’ll first tackle the hardware involved, then go into detail setting up the software and associated websites. We’ll conclude it with a look at how to turn your mined Litecoins into cash.

UPDATE . As reader Chris rightly points out, including the increasing “difficulty” of mining blocks in your ROI calculations is important. I didn’t want to journey down that rabbit hole just yet and subsequently overwhelm readers new to the mining craze, but it’s yet another aspect of mining that reinforces how volatile it is. If you commit to doing this, base your decision on extensive research and not merely an impulse. In my opinion the increasing challenge and dwindling supply of a finite amount of coins will raise the overall value of Litecoin.

To study up on the difficulty factor, read this Wiki page. This chart from Litecoinscout.com illustrates the rise in difficulty over the last 10 days, but that alone shouldn’t be a barrier to entry:

Litecoin Difficulty Changes: 10 Day Window

4 GPU Litecoin/Dogecoin Mining Rig Guide

Home-built crypto currency mining rigs are a great way to invest in the new digital currencies, while avoiding some of the risk involved in purchasing the coins outright. This guide will show you how to assemble a fairly easy to build ‘milk crate mining rig’. This rig is capable of mining at over 2,800Kh/s. As of the date this guide was updated (01/28/2014), a 4 GPU Litecoin mining rig like this can generate over $600 USD worth of Litecoins per month or over $1k worth of Dogecoin, and will cost you between $2,000-$2,500 to build. If you want to see the live current calculation yourself click here. for a pre-configured calculator with the hashrate and energy use for this Litecoin mining rig already entered. You’ll just have to enter your electricity rate to calculate your net profits. I have built several of these rigs for myself and friends. Build time should be no more than 2 hrs.

Mining Hardware Build List

Power Supply – $230 –  EVGA 1300 Watt Gold Rated Power Supply  -  If this PSU is out of stock, or is taking longer to ship than you’d like to wait for, I’d recommend getting two lower powered EVGA 750 watt Gold Rated PSU’s  and connecting them together with this add2psu  adapter to power your rig. Either option will cost roughly the same amount.

Motherboard – $90 –  ASRock MB-970EX4 Socket AM3+/ AMD 970/ AMD (best motherboard for mining at the moment). If it is out of stock, this one  or this one are good alternatives.  

Graphics Cards (GPU) -  $400 x 4  AMD Radeon R9 280x  - This is one of the best graphics card for alt-currency mining (now that the Radeon 7950 is virtually unavailable). It is capable of over 750Kh/s per card, bringing your total rig power to 3,000 Kh/s. Stick with the Sapphire, Gigabyte, ASUS or MSI brands and avoid the HIS, Powercolor and XFX brands as they are known to have issues with mining. There are several other recommended mining cards listed here. Just remember to calculate the power requirements for whichever cards you decide to go with.

CPU – $40 - AMD Sempron 145 Processor  - We’ve chosen the cheapest option here, since the CPU doesn’t affect mining efficiency.

RAM   - $50  -  4 GB Corsair DDR3 RAM

1x to 16x Powered Riser Cables  -  $6 x 4  -  PCI Express 1X to 16X Powered Riser Cables  - These riser cables allow you to suspend the graphics cards abover the motherboard for better airflow/cooling. We recommend powered riser cables which plug directly into the PSU to reduce the wattage required from the motherboard. The 1x male end of the cable plugs into either the 1x or 16x slot on the motherboard, and the 16x end of the cable is where the graphics card gets plugged in.

Hard Drive –  $40  -  Small Solid State Drive

Case  - $6 - Plastic Milk Crate  (you might be able to pick one of these up at an office supply store for less). Alternatively, for a much more aesthetically pleasing build, check out the custom built cases  designed and built by Rich Chomiczewski. I’ve personally used his cases and can recommend the excellent build quality and customer service he provides.

Extra Cooling   -  $30  -   Box Fan  - Best cooling for a mining rig, as it pushes all that hot air away from the rig.

Operating System   -  $0-$90  -  Windows 8.1   – If you’re familiar with Linux you can of course download it for free (some folks consider Linux to be the best OS for litecoin mining . since it keeps your overall costs down, improving your litecoin mining ROI). If you want to load the OS from a CD you might want to pick up a $29 external USB powered DVD drive. Many laptops in the ‘thin & light’ category are shipping with no internal optical drive, so it will probably come in handy for other uses as well.

Monitor . Mouse and Keyboard  - Most people already have this trio somewhere around the house, but I included it since you’ll need it to set up your rig. Once the rig is setup it can run without these as a ‘headless mining rig’.

A note on ROI (or return-on-investment). I built my first rig in April 2013, and it paid for itself in less than 6 months, however there is no guaranteed return on mining rigs, so use your own judgement, do your due diligence, and decide if this is an investment you want to make. If nothing else, you will learn a LOT about computers in the process of building your rig.

If you’d like to trade Litecoins or any other Scrypt based currency to Bitcoin, I would recommend the Cryptsy  exchange. Also, I personally use and highly recommend CoinBase for buying and selling your Bitcoin for USD here in the US. If you sign up through that link, they’ll give you $5 worth of Bitcoin to get you started as a reward for buying your first coin through them!

Putting it all Together – Assembling your Litecoin Mining Rig

Unpackage everything

Install processor and RAM on motherboard

Plug in all riser cables

Place motherboard in plastic crate

Plug in SATA hard drive

Connect all GPUs to riser cables and fasten them to plastic crate evenly spaced out for maximum heat dissipation

Plug in all power supply connections

Connect mouse, monitor and keyboard and an internet connection (I used a  USB WiFi adapter )

Check all connections once more

Fire it up! Install the OS if needed. Install Graphics card drivers. Install mining software. Make sure fans are doing their job. Fire up the mining software. tweak for maximum hasrate and let ‘er run!

Budget Litecoin Mining Rig – Under $1k

You might have read our previous article, detailing how to build a 4 GPU Litecoin mining rig. but maybe you don’t want to invest that much money in a rig just yet. No worries! In today’s post, I’ll show you how you can assemble your own 1,350+Kh/s Litecoin mining rig for under $1,000.  As of the date this guide was updated (1/6/2014), a 3 GPU Litecoin mining rig like this, can generate over $250 USD worth of Litecoins per month. Click here. for a pre-configured calculator with the hash-rate and energy use for this Litecoin mining rig already entered. You’ll just have to enter your local power company rate to calculate your net profits. As you can see, using the best Litecoin mining hardware currently available on the market, we can build a fairly low risk investment in the future of crypto-currency. Let’s get started!

Mining Hardware List

Essentially, a Litecoin mining rig is a custom-built PC with parts chosen for maximum hash rates (determines how fast you can mine) and minimal overall cost. Here are the parts you’ll need to build this budget sub-$1,000 rig.

Power Supply – $140  -  Corsair 850 Watt Gold Rated PSU .

Motherboard – $95 – ASUS M5A97 . This motherboard has two of the 16x PCI-e slots  and two of the 1x PCI-e slots. All four slots can be used for mining GPU’s.  If it is out of stock, this one  or this one  are good alternatives.

GPUs – $600 (3x $200)  –  AMD Radeon R9 270  -  If the R9 270 is out of stock, the R9 270x costs just a bit more for slightly more hashing power and will still work with everything else in this setup. For specific configuration details be sure to read this litecoin mining hardware comparison .

Powered Risers – $30 (3x $10) Use 1x to 16x powered risers suspended above the motherboard with proper spacing for cooling the cards. You can get away with non-powered risers for rigs with up to 3 GPU’s, but I usually recommend going with powered risers if the price is similar as it reduces the strain on your motherboard.

CPU – $35 - AMD Sempron 145 Processor  Since CPU specs have no effect on mining efficiency, we’ve chosen the cheapest option here.

RAM   - $40  – 4GB Kingston DDR3 RAM

Hard Drive –  $40  -  32GB Solid State Drive or boot BAMT from a fast USB thumb drive )

Case  - $6 - Plastic Milk Crate  (you might be able to pick one of these up at your local office supply store for less)

Power Switch   -  $6  – A basic Motherboard Power Switch does the trick, making it easier to start up your mining rig.

Extra Cooling   -  $30  -  Box Fan  (good supplemental cooling for a mining rig, as it pushes all that hot air away from the cards)

Operating System   -  $0-$90  -  Windows 7 is my preference, but if you’re familiar with Linux you can of course download it for free (some folks consider Linux to be the best OS for litecoin mining . since it keeps your overall costs down, improving your litecoin mining ROI   or return-on-investment). If you will be loading the operating system from a CD or DVD, a $29 external USB powered DVD drive  will come in handy.

Monitor . Mouse and Keyboard (to install the OS and configure the mining software, no need to buy more than one set since you only use this for setup)

Total Cost:

How to build a bitcoin mining rig guide

Posted by: admin

In this E-Book, I am going to share my project in creating a Bitcoin mining cluster, which I started in June 2011. I will try to include everything from beginning to the end with as much detail as possible. Most of this project was trial and error, so I will do my best to note each step of the way with all the pros and cons. I would beleive this to the most complete guide currently available for helping people understand the basics of Bitcoin mining, and actually being able to delve into it as well. Please keep in mind that my Bitcoin operation is completely handled under Linux operating systems, however I do have a few Windows based Bitcoin miners so I will provide notes, guides, and best practices for that OS as well. Also note that many of the references that I make in this E-Book are in regard to my person Bitcoin mining rigs.

If you do not know what Bitcoin is, I highly suggest you read up on the following sites:

Here are pictures of a few of my rigs:

10 steps to implement and deploy your Bitcoin Mining Rigs

Below are the 10 steps to getting your bitcoin mining rigs running. Hopefully, I will be able to answer all your questions later in this E-Book.

1. Setup bitcoin mining pool accounts

Assuming you are not solo mining, you will need to create account with 1 or more bitcoin mining pools. Discussed in section 12.

2. Find a location for your bitcoin miners

You will need to find a good place that you can keep your bitcoin mining rigs. Somewhere they will not be bothered. No kids, pets, weather, or other interferences.

3. Ensure location quality / resources (Internet, power, cooling)

You will need to ensure that wherever you keep you bitcoin mining rigs you have: An internet connection, enough power, and a suitable operating temperature with enough airflow. Discussed in section 6, 7, and 8.

4. Asses your budget

Determine how much money you have, and want to invest in bitcoin miners. Weigh the profit, loss, and risks. Discussed in section 2, and 3.

5. Decide on hardware and purchase hardware

You will need to select and purchase the best hardware according to your budget. All this is explained in section 4.

6. Build, configure, and test bitcoin rigs

You will need to be capable of building these machines from scratch. Without the knowledge of building computers, it is going to be difficult to be successful in running your own bitcoin mining rig. You must know the ins and outs of these beasts. Also discussed in section 4.

7. Obtain and implement software and scripts

There are many options to choose from. Will you be using Windows, or Linux? What kind of Bitcoin mining software will you choose? Will you decide to automate your bitcoin mining rigs? The questions will never end. Learn more in section 11.

8. Setup bitcoin proxy

Now that you have everything setup, you could centralize everything using a bitcoin proxy. This will always keep your login information the same, and allow you to manage mining pools and workers very easily. Discussed in section 13.

9. Deploy

Finally, deploy your bitcoin miners, and start generating bitcoins!

10. Overclock

When everything is running smoothly, get even more performance out of your GPUs by overclocking them. Discussed in section 9.

Here are the primary things we will cover in this E-Book:

I apologize for the order of these items, as you may need to jump around through sections to reference terms, and explanations. I did not think I would be elaborating this much.

What is Bitcoin mining?

A very good guide on how to build a Bitcoin Mining Rig Cluster

Today ou need ASIC to mine Bitcoin

10 steps to implement and deploy your Bitcoin Mining Rigs

Assuming you are not solo mining, you will need to create account with 1 or more bitcoin mining pools. Discussed in section 12 .

2. Find a location for your bitcoin miners

You will need to find a good place that you can keep your bitcoin mining rigs. Somewhere they will not be bothered. No kids, pets, weather, or other interferences.

3. Ensure location quality / resources (Internet. power, cooling)

You will need to ensure that wherever you keep you bitcoin mining rigs you have: An internet connection, enough power, and a suitable operating temperature with enough airflow. Discussed in section 6, 7, and 8.

4. Asses your budget

Determine how much money you have, and want to invest in bitcoin miners. Weigh the profit, loss, and risks. Discussed in section 2, and 3.

5. Decide on hardware and purchase hardware

You will need to select and purchase the best hardware according to your budget. All this is explained in section 4.

6. Build, configure, and test bitcoin rigs

You will need to be capable of building these machines from scratch. Without the knowledge of building computers, it is going to be difficult to be successful in running your own bitcoin mining rig. You must know the ins and outs of these beasts. Also discussed in section 4.

7. Obtain and implement software and scripts

There are many options to choose from. Will you be using Windows. or Linux. What kind of Bitcoin mining software will you choose? Will you decide to automate your bitcoin mining rigs? The questions will never end. Learn more in section 11.

8. Setup bitcoin proxy

Now that you have everything setup, you could centralize everything using a bitcoin proxy. This will always keep your login information the same, and allow you to manage mining pools and workers very easily. Discussed in section 13.

9. Deploy

Finally, deploy your bitcoin miners, and start generating bitcoins!

10. Overclock

When everything is running smoothly, get even more performance out of your GPUs by overclocking them. Discussed in section 9.

WHAT IS BITCOIN MINING?