Here's What ASIC Mining Really Is.
Intro to ASIC Mining
by Gregory Cheng Lehigh University Computer Science and Business
Traditional Mining Practices
With most cryptocurrencies comes the notion of mining: the process of confirming transactions in order to ensure the validity of the transaction. Individuals known as miners automate this process using their computers, which process these transactions. By confirming a transaction, a miner is rewarded with a fraction of the transacted amount as a mining fee. This means that miners not only support the network of the mined cryptocurrency, but also are rewarded for their work with this transaction fee. In many cases, this makes mining a profitable act for the owner of mining computers.
Because only one entity can claim the mining fee for any given transaction, miners are seeking more and more hashing power, which is the basic unit of computation when mining. With more hashing powers, miners can confirm more transactions and claim more of the cryptocurrency.
Miners first started using the CPU’s (central processing units) of their computers to mine. However, miners moved to GPU’s (graphical processing units) to mine, because a standard GPU ran at a hashing power 50-100 times more than a standard CPU. When the price of cryptocurrencies spiked in 2013 and 2017, miners bought an abundance of GPU’s in order to profitably mine them, resulting in a shortage in GPU supply.
Because miners were running short on GPU’s, and because they needed more hashing power, many started developing ASIC (Application Specific Integrated Circuit) computers, which are specially designed for mining specific coins, such as bitcoin or litecoin. These ASIC chips have exponentially more hashing power than any CPU or GPU. This means that some coins are driven almost exclusively by ASIC miners.
Many critics of ASIC mining claim that it contributes to the centralization of a cryptocurrency. Because ASIC miners are expensive and difficult to obtain, ASIC mining results in fewer individuals mining with much more hashing power per miner. If any individual were to gain the majority of a public blockchain’s hashing power, they would be able to control the network and approve fraudulent transactions. This makes the development of ASIC chips relatively problematic for some cryptocurrencies, where centralization is a potential issue.
In order to combat the creation of ASIC chips and the centralization of a cryptocurrency, many developers use algorithms that are designed specifically such that no ASIC chip can work on the algorithm. For example, this includes the Ethash algorithm for the Ethereum platform. This algorithm operates under a concept called proof of work (PoW) - a miner can confirm a transaction only if they can give proof that they have completed a specific amount of computational work. This means that no ASIC chip can more efficiently mine Ether faster than a comparable desktop computer can. The Ethash algorithm is proposed specifically for GPU units - graphics cards commonly found in desktop computers.