This article will teach you the basics when it comes to the art of ASIC mining. It will tell you what you need to know regarding tools, money-making, and will also address and explain some of the most significant factors involved in the procedure and inquiries that some may have about the process.
What is ASIC mining?
We need to start at the beginning by first looking into what exactly ‘ASIC’ means and its purpose to the cryptocurrency system.
ASIC stands for ‘Application-specific Integrated Circuit’ and it is customized fragments of computer hardware that are each designed to solely perform one specific type of function. An example of this would be that the telephone circuitry that is built into your smartphone is usually all stored onto a separate chip, which is committed to both making and receiving calls.
In addition to cryptocurrency, there are also ASICs that exist for gaming as well as sound and video capabilities for both stationary and mobile computing devices.
A straightforward comparison that can be made between CPUs (Central Processing Units), GPUs (General Processing Units), and ASICs is a difficult thing to ponder, let alone make. This is because CPUs and GPUs can technically be interpreted as a type of ASIC. Motherboard writer, Daniel Oberhaus, writes that:
“The main difference between mining ASICs and CPUs and GPUs is that the mining ASICs don’t have all the extra ‘bloat’ that makes CPUs and GPUs so versatile. You can’t run an operating system or play a video game on a Bitcoin ASIC because the chip is meant to do only one thing—mine Bitcoin. So a mining ASIC’s efficiency is gained because all of its computing resources can be optimized for a single well-defined task.” – Source
Now, before we properly get into ASIC mining, we must briefly explore what mining is. ‘Mining’ is, in a way, an informal term used to describe a resource-intensive computing process that is essentially just guessing a number that leads to the desired solution when it is plugged into a hashing algorithm. This determined value “solves” a block of Bitcoin transaction data, and the block is then finally added to the blockchain.
The miner that effectively solved the block is given a reward in cryptocurrency afterward and these algorithms that are based on hash are what is commonly referred to as ‘proof-of-work’ (POW) algorithms. Most of the major cryptocurrencies out there use a unique type of POW algorithm. A primary example of this would be Bitcoin, which uses a hashing algorithm called SHA-256. Two other examples are that Monero utilizes CryptoNight and the POW algorithm Ethereum uses is called Ethash.
There is an abundance of reasons as to why one would choose one POW algorithm over another, but as far as ASICs are concerned, that decision mostly boils down to the memory requirements.
Now that we have provided definitions for ASICs and the basic process of mining, we can now get into the elementary aspects of ASIC mining.
#1 – Pools & Hardware
If you are aspiring to mine any of the major cryptocurrencies, nowadays you will essentially need to join a mining pool (a system where communities of independent miners contribute to the formation of a block and split the reward amongst themselves afterward) and also be in possession of ASIC mining hardware. The conventional ASIC miner will generally consist of an ASIC chip, power source, fan, and mining software.
You will definitely need to use ASIC mining hardware on account of the fact that it is really the only hardware that is powerful enough to mine most of the major coins.
In the meantime, you will have to join a mining pool because, in reality, the average person does not have enough of the hash power that is required to mine a block all on their own. Now, with that said, if your goal is to mine cryptocurrency as nothing more than a hobby (i.e. you do not mind losing money), then you can just as easily start mining on any consumer CPU or GPU, although you will still need to join a mining pool.
#2 – Rigs
Not only will you need to use an ASIC rig (or any other equally high-powered and efficient rig) if you want to even stand a chance at profiting off of the mining, but you will also need a comparatively new mining rig. So, to sum up, you should purchase your rig at the launch and/or at a reduced price if not; the reason being that they tend to age rather quickly.
At this point, the outstanding question is most likely, “Which ASIC mining rig would be the most preferable?”
Well, the general consensus for this inquiry is that Antminer rigs from Bitmain are a good choice, as are Innosilicon rigs. Having said that, it can differ based on the coin and it can, in fact, differ wildly over time. To further illustrate this point, let’s say you are using a Spondoolies miner for Dash, an Innosilicon for ETH, and a Bitmain for Litecoin (LTC) in the winter of 2018, but then you have to switch it up for the next season. On top of that, some coins even have their own miners.
There are two important things that should be noted:
- Antminer is a brand, Bitmain and Innosilicon are both companies, and ASIC is merely a generic term, not unlike CPU and GPU (it basically just describes the processes that are being used).
- The best miners who mine for a specific coin can change at any moment, so make sure to do research on what the appropriate miner and brand is the one that is currently popular and/or reliable before purchasing.
#3 – Construction
When it comes to building a custom ASIC miner, it is indeed possible, however, you will not only have to deal with programming software (or assembling a preprogrammed software), but you will also have to go through putting together hardware as well.
#4 – Cryptocurrency variety
To answer any questions pertaining to whether or not you can mine any cryptocurrency with any type of ASIC, certain rigs will be custom-made for specific types of coins. In more basic terms, any miner that has been built to mine for Bitcoin is able to mine for pretty much anything that utilizes the encryption that the bitcoin uses.
With that in mind, it means that any miner that is SHA-256-based, like Antminer, can mine SHA-oriented currencies such as Litecoin and Bitcoin.
#5 – Making money
You are indeed able to make money by mining with an ASIC miner, however, it all depends on the basic price of the coin you mine over time, the overall cost of the hardware, the cost of electricity, and several other types of related factors.
If you want to find out about how much money you can make from ASIC mining, then you will have to figure out the general ‘hash power’ (in other words, the hash rate) of the miner for a specific type of cryptocurrency and then you will have to calculate that against electricity costs. A handy tool for this is the Bitcoin Mining Calculator, and this is how it works:
“Enter your Bitcoin mining hardware hash rate in GH/s along with the power wattage and your cost of electricity – dollars per kilowatt hour ($/kWh). The current Bitcoin difficulty, Bitcoin block reward, and Bitcoin price will be entered automatically.”
The future of ASIC mining
With all this being said about ASIC mining, it should be noted that, as it stands, the idea of implementing ASICs onto a cryptocurrency network is an issue that is deeply divisive. There are many who are in favor of them, including Bitmain spokesperson, Nishant Sharma, who believes that ASICs “demonstrate the mining community’s dedication and commitment to a particular currency—a basis for which participants can have long-term faith in the strength of a network.”
On the other hand, there are some who are against them. Oberhaus points out the following:
“At the time of writing, Bitmain’s two mining pools account for approximately 40 percent of the total computing power on the Bitcoin network. Controlling this much of the Bitcoin network means Bitmain also has an outsized influence on the ecosystem. During the Bitcoin forking bonanza last year, Bitmain played a major role in the decision to fork Bitcoin into two versions: Bitcoin core and Bitcoin Cash. There is also the specter of a long-theorized “51 percent attack,” when one miner can hold Bitcoin’s hash power hostage and wreak havoc with the network for as long as they’re in charge.”
Regardless of whether you are in favor of or against the implementation, ASICs do provide a variety of features for those who take part in them, and that includes the mining; it is all a matter of subjective opinion as to whether or not they will work out in the long-run on a widespread network.
Just like the traditional form of mining that has been carried out for many years, there is a lot to know about ASIC mining. Hopefully, this guide will serve as a good introduction.