GPU hashrates explained & the future of mining

Find out what's going on with GPU hashrates, how GPU performance affects them, and the basics behind it all.

Graphics cards were used mostly for gaming for decades. Ever since 3Dfx and Nvidia revolutionized graphics card design with the Voodoo and Nvidia 256 (the first-ever GPU), respectively, an average computer user linked graphics cards with video games. PC users had other purposes for GPUs, but gaming was the most popular one by far. 

And then, in 2009, Bitcoin arrived. Somewhere down the road, miners discovered that GPUs are far better at mining than CPUs. From then on, graphics cards became the best way to mine most cryptos. We call the mining performance of a single GPU the GPU hashrate, and this rate tells us how many hashes it can compute each second. But let’s not get ahead of ourselves. First of all, let’s talk about some blockchain basics needed to understand what all these words mean.

Blockchain basics

A blockchain is a type of database made out of blocks of data. These blocks are chained together using cryptography. This database contains a list of records (transaction data when used for cryptocurrencies) and can be centralized or distributed across a peer-to-peer network, which is the case with most cryptocurrencies. Another important feature of blockchain tech is that most of these databases are open to the public. 

Each block of data in the chain contains sets of information among which is a crypto hash of the previous block in the chain. Aside from the crypto hash, each block also contains a timestamp and data regarding transactions. This design prevents altering a specific block in the chain without altering the data of all subsequent blocks. It’s extremely hard to alter all blocks in the chain of a decentralized blockchain. In other words, decentralized blockchains are virtually impossible to hack, but there are ways to do this. 

Cryptocurrencies are tied to a blockchain. Cryptocurrencies use blockchain as a way to solve the double-spending issue, as a public ledger, and as a sort of payment platform. This last thing is the important part. You see, in order for a transaction to enter a public blockchain, verification has to take place. And miners’ hardware does just that. In return, they receive newly minted coins, generated once a new block is filled with data. 

What is hash and GPU hashrate?

According to Bitpanda, a hash function is a cryptographic function that “turns a random input of data into a string of bytes with a fixed length and structure (hash value).” Blockchains use hash functions to verify transactions. Using hashes also increases the security of a blockchain. 

Hashes work by transforming words, sentences, data, numbers, etc. into alphanumeric codes of fixed length. There are lots of different hash algorithms but the one used by Bitcoin (SHA256), turns data into strings of digits and letters that are 64 characters long. For instance, once encrypted with SHA265, the word Levvvel looks like this:

398d8830e14a8fdb1b5c14f6d8a6270fc13766e72fddc6608bd5deb5cd6e3818

But, the same word will look completely different if we use lowercase l. So levvvel looks like this:

67c185af705fe2f9afbbf3fd6bf9156e08487c61be56575b36b7408a13dd76ed

Pieces of data that are exactly the same will always have the same hash value. A number 2021 will always have the same hash value, as long as you’re using the same hash algorithm. Also, the hash value always has the same number of characters no matter how long the input data is. You can enter a whole book and SHA256 will still create a 64-symbol hash. 

As we’ve already said, each block of data in a blockchain contains a hash of the previous block. Since you cannot use an output hash to reverse engineer input values (transactions) it’s extremely hard to hack a blockchain. But here, we’re interested in using hashes for validating transactions.

So, once a cryptocurrency transaction takes place, it isn’t written in the blockchain right away. Before it enters into the database, miners across the world have to solve complex equations in order to verify it. These equations include producing a hash that’s of equal or lower value of the “the target” hash. They do this by changing a single value of the hash called “nonce.”

The target hash is always randomly generated, so solving these equations can take an extremely high number of tries. And whoever solves it, gets a reward in a form of a predetermined number of coins and the transaction gets recorded in the new block. 

So, hash rate represents the total computational power of the whole network and it’s represented in hashes per second.  At least in proof-of-work blockchains, such as Ethereum and Bitcoin.

For instance, at the moment of the writing, the Ethereum hashrate is 408.13 terahashes per second (TH/s). But, there’s also a hash rate of individual hardware used for mining cryptocurrencies. It represents the total number of hash equations a single piece of hardware can solve in one second. Different cryptocurrencies use different hash algorithms so the same GPU has different hash rates depending on which crypto you plan on mining. 

For this article, we are using the Ethereum hashrate, since this coin is the most popular among miners. For instance, the hashrate of an RTX 3090 is 121 MH/s (mega hash per second). So, this GPU can solve 121 million hash equations per second, which is a lot. RTX 3060 Ti has a hashrate of about 60 MH/s but its MSRP was almost four times less than the RTX 3090. Now you know why no one can find this card at store shelves. Miners love it. 

Why are GPUs so good for mining crypto?

During the early days of crypto, people used CPUs for mining. But they soon realized that GPUs are way better than CPUs for processing 32-bit instructions, which are used when solving equations that are part of the transaction verification process. Also, they were easy to chain together and create mining rigs. They were also easy to purchase and relatively cheap.

Nowadays, ASIC hardware,  specifically engineered to perform hashing functions, mines most of Bitcoin and some other coins. You can try using your graphics card for mining Bitcoin but it won’t be profitable. The thing is, most cryptocurrencies handle the increase of mining agents in their blockchain network by upping the complexity of equations. The more computing power in the network, the more powerful mining hardware you need to stay profitable. 

That’s why most Bitcoin miners are using huge ASIC farms to mine the coin. The Bitcoin network is huge so you’ll need lots of current graphics cards to match even a single ASIC device. But, GPUs are still extremely popular for mining Ethereum because creators of this currency made sure their coin won’t be profitable to mine with ASICs.

They did this by combining equation solving with working on huge sets of data, which take a lot of video memory. So, using ASIC hardware for mining Ethereum is very expensive because you have to equip those machines with an incredible amount of relatively fast video memory to keep up with their insane hash rate. 

And since the amount of memory needed for keeping these data sets is increasing along with the complexity of equations, miners need to update their GPUs with new models that come with more memory that’s also faster to keep their operations profitable. 

What’s the future of GPU mining?

At the moment, mining Ethereum is extremely profitable and this is one of the major reasons why the GPU market is in shambles right now. Miners, especially those with larger GPU farms, can afford to buy graphics cards at inflated prices. Next, they often buy cards in bulk, sometimes directly from manufacturers. This prevents many cards from even landing on the market. Hell, these days even laptops aren’t safe

To respond to the outcry coming from people who, you know, want to play games on PC and aren’t ready to pay ludicrous prices for new graphics cards, Nvidia decided to gimp the mining power of the RTX 3060 and also introduced a new line of mining-only GPUs. The news looks like Nvidia decided to give gamers an option to get a new card at relatively normal prices, at least on the surface.

If we look at the bigger picture, Nvidia probably wants to prevent used gaming GPUs from flooding the market once the current crypto boom dies down. This happened back in 2018, flooding used markets across the world with cheap GTX 1000 series cards. Instead of a bunch of used gaming cards that you can purchase for cheap, you’ll have tons of mining-only cards without video outputs and without a way to convert them to play games.

But this move doesn’t mean the GPU market will return to normal soon. First of all, the newly announced mining cards don’t have stellar performance. If they aren’t competitively priced, miners will just continue buying other graphics cards that don’t have their hash rate gimped. Next, even if Nvidia reduces mining performance in current cards with a future driver update, miners can just continue using current drivers.

Also, there’s a high chance for miners to go around the limitation and for RTX 3060 cards to regain their full power with a custom driver. Big mining operations certainly have the resources to hire engineers to write custom drivers and other software. And if CMP HX mining cards launch at a competitive price and end up extremely popular, what’s stopping manufacturers from focusing on the production of mining cards? Gaming card production may get decreased if this happens, further reducing the number of available gaming GPUs on the market.

To be honest, seeing RTX 3060 cards selling for $1,000 before even officially launching doesn’t give us much hope for the GPU market normalizing after CMP mining cards land. Finally, the Ethereum 2.0 update, which will make Ethereum mining obsolete, won’t be fully implemented anytime soon. And yes, while the coin value deprecated recently, we’re still far off from reaching the lower value of Ethereum mining profitability. 

So, the conclusion isn’t favorable to gamers. It looks like GPU mining will keep being popular in the foreseeable future. And since many gaming GPUs still have a pretty respectable Ethereum hash rate, they will continue flying off even before landing on the shelves. So, if you plan on getting a new gaming GPU it can be lucrative to use it for mining when idle.