When cryptocurrency first entered the world, even an ordinary computer could mine the token. However, as graphic video cards (GPUs) appeared, so did the need for greater hash speed. As a result, application-specific integrated circuit (ASIC) miners appeared. The ASIC is a powerful processor, and it is used to solve specific tasks. Let’s look at application-specific integrated circuit miners and how you can use them for your mining needs.
Looking to learn more about the basics of Crypto? Check out our Crypto terms every investor should know.
What Is an Application-Specific Integrated Circuit (ASIC) Miner?
An application-specific integrated circuit (ASIC) is used for a specific purpose. With an ASIC miner, the hardware mines for digital currency. These ASIC miners are constructed to mine a particular digital currency. For example, a Bitcoin ASIC miner can mine only Bitcoin currency.
If you want to develop and manufacture ASICs mining devices, it can be a complex and costly undertaking. Since ASICs are built for mining cryptocurrency, they can complete the job faster than those less powerful computers. Over the years, these ASIC chips have become more efficient, with the latest generation operating at 29.5 joules per terahash.
Related: Establishing Yourself as a Cryptocurrency Miner
Understanding Application-Specific Integrated Circuit (ASIC) Miners
Unlike RAM chips or microprocessors, ASICs are designed to mine cryptocurrencies. In the beginning, the creator of Bitcoin intended to mine these tokens with central processing units (CPUs) on desktop or laptop computers. Over the years, the ASICs’ powers surpassed graphic processing units and CPUs in commuting capacity and electricity consumption.
To mine cryptocurrency, miners must perform complex mathematical calculators known as hashes. With each hash, there is a chance of yielding more cryptocurrency. ASIC miners optimize their computers to compute these hash functions in a short amount of time. Mining cryptocurrencies can be expensive, especially when you consider the proposition of declining profitability. Despite that, many people are still drawn to mining. Many individuals are willing to incur those startup costs to pay for the expensive ASICs and other related expenses, such as high energy bills.
ASIC Miner Development
A few proof of work blockchains requires cryptocurrency mining to carry out its operations. With that, solving complex mathematical problems are required for the mining process. Those puzzles use intrinsic hash functions linked to the block and transactional data. Miners race against each other to find a solution to the puzzle. Once they have solved it, they are rewarded with cryptocurrency added to the block. Those tokens include all of the transactional fees for the block. That motivates the miners to collect more transactions to increase their rewards.
In the early days, any computer with minimal processing power could mine cryptocurrency. However, with the popularity and acceptance of digital currency, many individuals have been attracted to crypto mining, making it more difficult for an average computer to keep up with those demands. As a result, it is a race to harness the most hash power to solve those puzzles. ASIC miners were the answer for those individuals who needed more hash power for their mining endeavors.
ASIC Miner Advantages
Both CPU and GPU mining rigs rely on components that can serve more than one function. However, ASIC miners are used for the sole purposes of cryptocurrency mining. It is much more energy-efficient and powerful than a standard GPU miner with that singular focus. As previously mentioned, an ASIC miner can solve a specific algorithm. For example, ASIC miners for Boticon can only calculate SHA-256 hash algorithms, while Litecoin requires scrypt. While an ASIC miner could mine other cryptocurrencies based on a similar algorithm, many miners who invest in ASIC will use it for a specific purpose.
Related: Joining A Mining Pool: Pros And Cons
ASIC Miner Considerations
Before you invest in an ASIC mining rig, there are some things that you can take into consideration. ASIC miners cannot mine every type of cryptocurrency.
Location is another concern. For the most part, GPU mining rigs can be used and placed in a person’s home. However, ASIC miners generate heat and noise. It is not a suitable solution for a home unless you have a garage or basement.
While ASIC machines are energy-efficient, they use a tremendous amount of power. In some cases, you may need to upgrade the electrical components to handle the increased power loads.
ASIC mining rigs allow the miner to join a pool to share rewards of minted blocks. Miners join the pools to increase their earning chances by paying for high-value hashes called shares. Before entering a pool, consider its size, payment rules, and reputation. Finally, don’t forget about the return on investment. ASIC miners are costly. You want to make sure the return justifies the high costs and ongoing operating expenses.
What Are ASIC-Resistant Coins?
You already know that ASIC mining rigs are designed to mine specific cryptocurrencies, but some algorithms are resistant to being solved by these machines. If you try to mine cryptocurrencies with these rigs, the return would be minimal, even if you could solve the puzzle. Why are there ASIC-resistant coins? One reason is to prevent the centralization of specific blockchains. Today, a few private mining farms serve as the primary source of Bitcoin’s total hash rate, contrary to the principle of decentralization.
Related: Litecoin vs. Bitcoin: What You Need to Know
Before purchasing an ASIC mining rig for your operations, you need to consider the costs and other expenses to maintain it. Yes, it can solve these mathematical problems faster, but these rigs have high upfront and recurring expenses. Plus, you cannot mine some types of cryptocurrencies with these machines. Keep all of those things in mind before investing in an ASIC miner.
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