What You Need to Know About ASIC Crypto Mining
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If you want to do great work, use great tools.
ASIC stands for “application-specific integrated circuit.” The term refers to a purpose-built computer chip that does exactly one thing with as much accuracy and power as possible – it’s savant-level processing technology.
Even though chips in this category are highly specialized, they’re extremely common. An ASIC might operate a digital voice recorder, power a cell phone, or even control a satellite in orbit around our planet. It’s only a question of identifying which architecture best lends itself to achieving a certain goal, then designing a chip to match.
ASIC miners present a stark contrast to the GPU miners that drove so much of crypto’s earlier days. You might consider a GPU chip as a luxury sedan, equally as useful for a cross country road trip as it is for a quick ride to the grocery store. But ASIC miners are like space shuttles that leave the atmosphere. They represent a step-change in how we mine crypto, and they’re designed from top to bottom to do just one thing.
Here’s what you need to know about ASIC mining.
ASIC mining did to GPUs what GPU mining did to CPUs.
That is to say, it changed the landscape permanently.
GPUs emerged for crypto mining between 2010 and 2011. They were commonplace computing hardware that happened to be many times more effective than their CPU-based predecessors. GPU mining caused a paradigm shift: the community had to adopt these improved mining systems in order to remain competitive. The new stuff was simply too good by comparison to the old stuff.
But then came the new-new stuff. The first ASIC cryptocurrency miners appeared in 2013, and the paradigm shifted the paradigm once again. Because they were designed from the group up with a sole purpose in mind – to mine a designated cryptocurrency – these devices were so much more successful at mining that it became infeasible to stick with GPUs. Miners had to adapt or retire.
As purpose-built machines, ASIC miners aren’t reusable.
An ASIC crypto miner is like an assembly line that solves math problems instead of creating a product. Imagine a factory that turns component parts into finished Honda Civics. Every step in that process is maximized for efficiency in pursuit of a single, well-defined goal. Even though that assembly line might have a lot of technological power at its disposal – high-powered machinery and robotic automation, for example – it can only make Honda Civics. This factory can’t just start making iPhones overnight.
So it goes with ASIC mining chips. From their physical construction to the inputs and outputs that drive them, their entire purpose in this world is to mine a designated cryptocurrency. To change the system is to break it.
ASIC miner prices are complicated, and they’re not a casual purchase.
When this category of mining hardware goes up for sale, it isn’t like an item in a store with a conventional list price. These machines are sold at a price that reflects how profitable the hardware is if it mines its designated cryptocurrency. Their sale prices fluctuate up and down according to what crypto markets happen to be doing at the time. And yes, ASIC manufacturers might sell this fancy hardware at a loss in order to move customers closer to a purchase decision.
Mining hobbyists might rub their hands with glee at the prospect of buying such a high-powered piece of hardware, but they ought to understand what they’re getting into. ASIC mining hardware is noisy, emits a lot of heat, and requires lots of electricity. It’s likely to be unprofitable (and uncomfortable) to run this kind of mining rig at home. This caliber of hardware usually goes to industrial-scale operations and enjoys access to cheap electricity for the sake of running a more profitable business.
ASIC miners are cause for controversy among the mining community.
Mining with GPUs used to be the competitive norm. Crypto hobbyists could build and maintain their own rigs using conventional computer hardware. They’d trade tips and ideas with each other on how to squeeze more power out of their GPUs, and voice their opinions on where the future of a certain cryptocurrency was heading. But ASIC miners nearly represent the commoditization of this earlier passion and innovation.
Let’s draw a parallel to a hypothetical indie band with a small but committed following – this band could be said to be in its GPU mining era. It tours and sells merchandise successfully, but record executives either don’t notice or don’t care. There is a sense of community around this band because they experiment and play by their own rules.
Then suppose one of their songs catches on big-time. The song appears everywhere, from conventional radio airplay to a new Apple commercial, being the theme of a movie soundtrack. Pop culture is on fire for this song, and the band starts selling out stadiums so everyone can see them perform it live.
The band has entered its ASIC mining era of doing one thing extremely well, and the committed fans from the GPU era predictably feel resentment. Though they are an undeniable part of the band’s present success, they’re so far removed from that success that they feel forgotten and overlooked. The tension between large-scale ASIC mining operations and the at-home GPU hobbyists plays out something like this today.
Mining will remain a hobby for some and a business for others. Different tools will make sense for use by different people and different organizations, but there’s no denying that ASICs are the latest and greatest edge available to anyone who wants to mine crypto seriously.
Those who want to achieve great results will lean on advanced tools to do so, and it’s tough to beat ASICs in crypto mining.
Philip Salter, head of mining operations, Genesis Mining