What are ASIC Miners? A Closer Look into Bitcoin Mining
In the early days of cryptocurrency, the mining of Bitcoin was done at home using personal computers (PCs). Due to the relative infancy of crypto at the time, computational power was not an issue for many. However, as the number of transactions increases and blockchains becomes more complex, specialized equipment is necessary to mine Bitcoins efficiently. This is where ASIC miners come into play.
What is Bitcoin mining?
The term mining in context with Bitcoin refers to the process of validating transactions on the blockchain which is done through a decentralized computational process performed by thousands of high-powered computers all over the world.
The validation process has been designed to require computers to solve complex mathematical problems that confirm bitcoin transactions on the blockchain. Those who participated in this mining process are therefore referred to as bitcoin miners.
As prefaced above, mining requires the use of hardware, a lot of energy, and time to solve these blocks. For each validated block, miners are then rewarded a specified amount of Bitcoin. It is referred to as mining because, just like with gold, miners use a lot of work to produce the reward.
History of Bitcoin mining
Over the years, the process of mining bitcoins has become more sophisticated and machinery has evolved to speed up the mining process and the chance of a miner solving the block.
Mining via personal computers’ CPU
The first Bitcoin block, known as the genesis block, was mined on the 3rd of January 2009 by bitcoin’s pseudonymous creator, Satoshi Nakamoto.
Back then, there was barely any mining competition, and no specialized mining equipment was required. Miners could solve blocks using their personal computer’s CPU (Central processing unit).
The evolution of using GPU’s for mining
As more miners joined the network, mining difficulty rose. This required more specialized hardware. In October 2010 the code for mining bitcoin with GPUs (Graphics processing unit) was released.
These GPUs can compute more than one mathematical equation at a time and were re-programmed to compute equations that are required for mining bitcoins. This made the process of mining Bitcoins much more efficient than mining with CPUs.
With this new innovation, mining difficulty continued to rise, and this rise in difficulty paved the way for another new innovation.
The rise of FPGAs
Just one year later, in 2011, Field programmable gate arrays (FPGAs) were reprogrammed to compute bitcoin-orientated mathematical equations. These FPGAs could produce around double the computational power of GPUs and used three times less energy than GPU setups, making them the best miners on the market.
In 2013, Canaan creative released the first application-specific integrated circuit system (ASICs). These systems were designed for the sole purpose of mining bitcoin- They are designed to only compute equations used in the process of mining bitcoins.
Today, ASIC miners are still the most widely used miners and no innovations have proven more efficient than them.
What are ASIC miners and how do they work?
Like previously mentioned, mining is the process of calculating complicated mathematical calculations in the hope that the miner finds a very specific output.
Mining equipment hashes out many outputs before finding the correct hash, the first miner to find that number or hash wins the block. The amount of guesses or hashes a miner can produce per second is known as the hash rate.
Almost all computer hardware around you is designed to perform multiple tasks. In contrast, ASICs are developed specifically for bitcoin-related calculations, they can therefore produce the highest hash rate for the purpose of bitcoin mining possible.
Why ASIC miners dominate the industry
ASICs dominate the mining industry for 2 main reasons. ASICs not only offer the highest hash rate on the market, but they are more energy-efficient compared to other miners. They use far less power than a group of graphics cards would to produce the same hash rate.
The high hash rate and lower power usage of ASICs make them much more cost-effective as they cost less to produce the same hash rate and make on average more bitcoin per day due to their higher chance of solving a block.
Downsides of ASIC’s dominance
As much as ASICs are great at securing the bitcoin blockchain and providing efficient mining, there is one downside to bitcoin mining being ASICs dominated.
Only individuals and corporations with a lot of capital can afford to purchase expensive mining hardware and cover electricity bills while being able to stay profitable. This can centralize the bitcoins hash rate as there are large chunks of people running the network and receiving the newly mined bitcoin.
ASIC Miners Manufacturers
Ever since the first ASIC system was produced by Canaan, many manufacturers have started to produce ASICs, making mining manufacturing a multi-million dollar industry. Some of the biggest players include Bitmain, Bitfury, and ASICminer.
You can find a list of ASIC manufacturers here: https://www.asicminervalue.com/manufacturers
To summarize, ASIC Miners are specialized hardware that enables Bitcoin miners to produce the necessary computing power to solve the increasingly demanding validation process in today’s complex blockchain networks.
Learn more about Bitcoin, and other crypto-related news and insights by exploring more topics on our learn page at Easy Crypto.
Sign-up to our newsletter below to have the latest updates delivered to your inbox!