The Rise of the Evil ASIC

3 minute read

We’ve written before about the different types of cryptocurrency miners that exist. Our Mining 101 highlights how GPU and CPU miners differ from ASIC miners. Today we want to touch on some new trends and market developments pertaining to mining technology and how some are leveraging it to manipulate the blockchain markets.

An ASIC Refresher

A CPU is the most general purpose processor that exists. CPUs exist in personal computers and servers to perform generic processing functions. A GPU on the other hand, is a processor that was designed for a specific use case - computer graphics and image processing. GPUs were originally created for gaming and design/graphics applications, but It just so happens that the same characteristics that make GPUs good for these applications (parallel processing), also make them great at processing algorithms (in parallel.) As a result, GPUs make great cryptocurrency miners. GPUs can be leveraged to mine most proof-of-work blockchain assets with varying effectiveness based on the design of an asset’s algorithm.

Now if a GPU is just a specialized CPU - An ASIC is an even more specialized version. ASIC stands for Application-Specific Integrated Circuit. If a GPU is good at processing algorithms, ASICs can be designed to process a specific algorithm very well. Because of this, ASICs are only good at one thing and are basically useless for any other use case. This main difference is the reason that GPUs are mass produced and sold through traditional distribution channels, whereas ASICs are typically built in smaller batches for very specific use cases.

The role of ASICs in the Crypto Markets

If you’ve been following our story, you’ll know that the club’s first miners were in fact, ASICs. The Moonlander 2 ASIC was built specifically to mine Litecoin. That means the designer of the Moonlander 2’s chip would have researched the design of Litecoin’s algorithm and worked backwards to design a processor that would be ultra efficient at solving it. This also means that the Moonlander 2 is only useful in mining Litecoin and nothing else. This has been a growing trend in the cryptocurrency markets. Recently, people have been designing ASICs to mine specific cryptocurrency assets for their own use to have an advantage over other miners who are using GPUs to mine the same coins. Because the ASIC is specifically designed to solve a coin’s algorithm, it is able to do so more efficiently than a general purpose GPU. This is, in a way, an example of market manipulation, and many are unhappy with this new trend.

Countering ASIC-based Market Manipulation

Considering that ASIC design is specifically tied to a coin’s algorithm, the only real way to counter this trend is to change a coin’s algorithm. You must consider that designing and manufacturing an ASIC can be time consuming and expensive. So when the very algorithm that an ASIC was designed to solve is changed, it’s back to the drawing board for the ASIC designers, and all the time, effort and cost that was put into the original ASIC is all for naught.

There are several recent examples of coins who forked to changed their algorithms to deter ASIC-based miners. This movement is known as the Fairmining Initiative. Just recently Sumokoin and Monero implemented hard forks deeming existing ASIC miners completely ineffective. Coin’s that the club has been mining like TurtleCoin and Worktips have either already changed, or are changing algorithms the coming weeks. The Fairmining Initiative may be effective in deterring the future design and manufacture of new ASIC miners. It introduces risk to ASIC developers that all of the work required to develop their miners will be wasted if a new hard fork is announced.

Editor's Note: Adam

The Fairmining Initiative may also create an arms-race for a more general
purpose ASIC capable of adapting to a number of different algorithms and be
able to handle changes to those algorithms on demand. This process is
similar to how GPUs over time evolved to become general purpose parallel
processing engines from simple pixel pushers of yore.

The Club’s Stance on the Evil ASIC

We think that mass adoption of ASICs to gain a mining advantage is generally bad for the markets. Most of those who are designing and manufacturing these ASICs are doing so for their own personal gain, and not to sell to other miners.

Furthermore, all of the time that the developer communities are spending on countering this trend by forking projects and changing algorithms is taking away from their work on project roadmaps - implementing new features and growing the communities. We commend the hard work each of the aforementioned projects have put into deterring this behaviour and hope that it will thwart future attempts by these evil market manipulators.