Hytale T1 and T2 Furnances and their Differences
Update 3 introduces furnace tiers. The standard furnace is Tier 1 by default and can be upgraded a single time to Tier 2. While both tiers perform the same core function, Tier 2 is faster, more fuel efficient, and better suited for processing large amounts of ore.

Tier 1 Furnace (Default Furnace)
The T1 Furnace is the standard furnace you have always used. If you do nothing, this is the version you are working with.
What stays the same:
Same smelting speed as before
Same fuel usage as before
Same number of input slots
No efficiency bonuses
Tier 1 is perfectly fine for early gameplay, but it becomes slow once you start smelting larger amounts of ore.

Tier 2 Furnace (Upgraded Furnace)
The T2 furnace is created by upgrading the existing furnace. This is a straight upgrade, not a replacement.
What changes at Tier 2:
30% faster smelting time
30% less fuel used per item
One extra input slot for ores
This makes a big difference when processing large batches. Faster smelting and lower fuel costs mean less waiting and fewer resource runs.

Upgrade Requirements
Upgrading a Tier 1 Furnace to Tier 2 requires the following materials:
5x Copper Ingot
5x Iron Ingot
5x Thorium Ingot
5x Cobalt Ingot
Once these resources are provided, the furnace is upgraded in place. You keep the same furnace, with a new look, but gain faster smelting, lower fuel usage, and an extra input slot.

Conclusion
Think of Tier 2 as a quality-of-life upgrade. Tier 1 works, but Tier 2 saves time and resources every time you smelt. Once you unlock the upgrade materials, there is very little reason not to do it.
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