Application-Specific Integrated Circuit (ASIC) Miner

What Is an Application-Specific Integrated Circuit (ASIC) Miner?

An application-specific integrated circuit (ASIC) is an integrated circuit chip that has been designed for a specific purpose. An ASIC miner refers to a computerized device or hardware that uses ASICs for the sole purpose of "mining" digital currency. Generally, each ASIC miner is constructed to mine a specific digital currency. So, a Bitcoin ASIC miner can mine only bitcoin. One way to think about bitcoin ASICs is as specialized bitcoin mining computers, or “bitcoin generators," that are optimized to solve the mining algorithm.

Developing and manufacturing ASICs as mining devices is costly and complex. Because ASICs are built especially for mining cryptocurrency, they do the job faster than less powerful computers. ASIC chips for cryptocurrency mining have become increasingly efficient, with the latest generation operating at around just 29.5 joules per terahash.

Key Takeaways

  • An application-specific integrated circuit (ASIC) miner is a computerized device or hardware that uses ASICs for the sole purpose of mining bitcoin or another cryptocurrency.
  • In general, an application-specific integrated circuit (ASIC) is optimized to compute just a single function or set of related functions.
  • Bitcoin miners review and verify previous bitcoin transactions and create new blocks so that the data can be added to the blockchain. 

Understanding Application-Specific Integrated Circuit (ASIC) Miners

Instead of being general-purpose integrated circuits—like RAM chips or PC or mobile device microprocessors—ASICs employed in cryptocurrency mining are specific integrated circuits designed solely to mine cryptocurrencies.

Originally, Bitcoin’s creator intended for bitcoin to be mined on central processing units (CPUs) of commonly used laptops or desktop computers. However, Bitcoin ASICs surpassed both CPUs and graphics processing units (GPUs) in terms of their reduced electricity consumption and greater computing capacity. After first gaining traction in mid-2013 when other hardware mining devices started hitting bottlenecks in their mining, Bitcoin ASIC miners have retained their lead.

Bitcoin miners perform complex calculations, known as hashes. Each hash has a chance of yielding bitcoin. The more hashes performed in a set period of time, the more likely a miner will earn bitcoin. ASIC miners are optimized to compute hash functions efficiently.

Although mining cryptocurrencies can be an expensive proposition of declining profitability, many people are drawn to it. Despite the uncertain return on investment, would-be cryptocurrency miners are willing to incur high upfront expenses for pricey ASICs and pay significant ongoing costs for electricity in return for the prospect of earning cryptocurrency.

Development of the ASIC Miner

Cryptocurrency mining is required by a proof of work (PoW) blockchain like Bitcoin to carry out its operations. The mining process involves solving complex mathematical problems using intrinsic hash functions linked to the block that contains the transaction data. The first miner to find the solution to the puzzle is able to authorize the transaction, or add the bitcoin to the block. Each winner in the bitcoin mining "lottery" receives a reward (a certain amount of bitcoin). The reward includes all of the transaction fees for the transactions in that block, which motivates miners to collect as many transactions into a block as possible in order to increase their reward.

In Bitcoin's early days, any computer with adequate processing power could mine bitcoin. But those days are long gone because the soaring popularity and growing acceptance of Bitcoin and other cryptocurrencies have attracted hordes of crypto miners. At the same time, cryptocurrency mining has become exponentially more difficult. These developments have resulted in a race to harness the most "hash power," which is a term used to describe the combined computational power of a cryptocurrency network (or alternately, the power of an individual mining rig). ASIC miners came about as a result of this quest for more hash power.

ASIC devices were popularized by China-based Bitmain, which dominates ASIC Bitcoin mining activities through its Antminer ASIC product range.

ASIC Miner Advantages

Though GPU and CPU mining rigs rely on components that have more than one function, ASIC miners are designed for the sole purpose of mining cryptocurrency. This singular focus makes an ASIC miner much more powerful and energy-efficient than a comparable GPU miner.

Because each cryptocurrency has its own cryptographic hash algorithm, an ASIC miner is designed to mine using that specific algorithm. For example, Bitcoin ASIC miners are designed to calculate the SHA-256 hash algorithm, while Litecoin (LTC) uses scrypt. Though this means that an ASIC miner could technically mine any other cryptocurrency that's based on the same algorithm, in reality, most miners who invest in ASIC hardware designed to mine bitcoin or Litecoin stick to mining that specific cryptocurrency.

ASIC Miner Considerations

Before investing thousands of dollars in an ASIC mining rig, here are some factors to be considered:

  • What coins can be mined? The list of cryptocurrencies that can be mined with ASICs is far smaller than those that can be mined with a GPU mining rig. Cryptocurrencies that can be mined with ASICs include Bitcoin, Litecoin, Ethereum, and a few others.
  • Rig location: Though GPU mining rigs can be located in one's home, ASIC miners are louder and generate much more heat. This means that one's home is not an ideal location for an ASIC miner, and alternate locations like a basement or garage need to be considered.
  • Power consumption: The latest generation of ASIC machines are more energy-efficient than GPU rigs but consume tremendous power nevertheless. An ASIC miner based in one's home may necessitate an upgrade of the electrical wiring system to handle the increased power load.
  • Choosing a Bitcoin mining pool: Mining pools enable miners to combine the power of their ASIC miner rigs to mine bitcoin and share the rewards for successfully minted blocks. Factors to be considered when choosing a pool include its reputation, size, and payment rules.
  • Return on Investment: Is the return on investment sufficiently high enough to justify the upfront cost of an ASIC miner and ongoing operating expenses?

Many miners join a mining pool to increase their chances of earning bitcoin. Mining pools pay for high-value hashes, known as shares.

What Is Bitcoin Mining?

Mining is the process of managing the blockchain and also creating new bitcoins. The job of bitcoin miners is to review and verify previous bitcoin transactions and then to create a new block so the information can be added to the blockchain. The mining process involves solving complex mathematical problems using intrinsic hash functions linked to the block that contains the transaction data. Various bitcoin miners compete intensely with each other to solve a necessary mathematical puzzle.

The first miner to find the solution to the puzzle is able to authorize the transaction or add the bitcoin to the block. Each winner in the bitcoin mining "lottery" receives a reward (a certain amount of bitcoin). The reward includes all of the transaction fees for the transactions in that block, which motivates miners to collect as many transactions into a block as possible in order to increase their reward.

What Is the Difference Between ASIC Mining and GPU Mining?

ASIC mining machines are developed for the sole purpose of mining a specific cryptocurrency such as Bitcoin or Litecoin. GPU mining involves the use of a GPU such as those sold by NVIDIA or AMD for mining cryptocurrencies. The obvious advantages of GPU mining are that the hardware is significantly cheaper than the equipment required for ASIC mining, and power consumption is lower as well. However, because GPUs have other applications in gaming and computer display, they are much less efficient in mining cryptocurrencies than ASIC miners are.

What Are ASIC-Resistant Coins?

ASIC-resistant coins are cryptocurrencies with ASIC-resistant algorithms. Mining such cryptocurrencies with ASIC mining equipment is virtually impossible, and even if one tries to do so, the returns would be extremely paltry. The main rationale for ASIC-resistant coins is to preserve the decentralization of their blockchains, which was one of the guiding principles underpinning the creation of Bitcoin. Currently, a few private mining farms and mining contract providers are the main source of a large proportion of Bitcoin's total network hash rate, which is contrary to Bitcoin's core principle of decentralization.

Article Sources

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  1. BitMain. "Antminer S19 Pro".

  2. Cambridge Center for Alternative Finance. "3rd Global Cryptoasset Benchmarking Study," Pages 32-33.

  3. Institute of Reseach and Journals. "Energy Efficient Bitcoin Mining to Maximize the Mining Profit: Using Data from 119 Bitcoin Mining Hardware Setups," Page 1.

  4. Cornell University arXiv. "Bitcoin Mining Decentralization via Cost Analysis," Page 1.

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