For miners, however, an ASIC rig offers greater efficiency and speed than a traditional GPU, which manufacturers argue will enable miners to unlock more value.
Who is correct in the long term remains to be seen, but for anyone with an interest in mining ETH, it’s a debate worth exploring.
ASICs versus GPUs
A Graphics Processing Unit (GPU) is a chip or electronic circuit which can render graphics for display on an electronic device.
Although their primary purpose is to manage and boost the performance of video and game graphics, GPUs are also very good at solving complex maths problems to verify cryptocurrency transactions. Most GPUs can be bought fairly cheaply from standard technology stores.
An ASIC, on the other hand, which stands for “application-specific integrated circuit”, is a highly specialised device that is designed for a specific purpose. For instance, a chip designed to run in a digital voice recorder or a high-efficiency Bitcoin miner is an ASIC.
Because ASICs focus on one specific purpose, they tend to be better at that task than more general devices, but this comes at a cost. ASIC rigs for cryptocurrency mining can cost several thousand pounds.
Although ASIC mining rigs are more efficient at processing hash functions – which, in turn, means potentially higher profit margins for miners – their introduction into the Ethereum blockchain has been widely criticised. Many people even want Ethereum to undergo another fork to shield it from ASIC mining rigs.
The main issue, critics argue, is that ASIC rigs result in the creation of huge mining farms which can control the future development of cryptocurrencies – in essence, they could undermine decentralisation.
Pros and cons for miners
The main advantage of using an ASIC to mine Ethereum is it is far more efficient than a GPU. Canaan’s new Ethereum ASIC, for instance, is around five times more efficient than commercially available GPUs.
Bitmain’s E3 Ethereum mining device can mine at 190 megahashes per second (MH/s), and the target for Linzhi’s Ethash ASIC miner is 1,400 MH/s. The higher the mining efficiency, the higher the potential profits.
Although ASICs have a higher initial price tag, miners only require a web browser to operate an ASIC, whereas setting up mining with a GPU requires miners to buy a lot of extra parts. Getting started with an ASIC is simpler, and ASICs use less power than GPUs, so electricity costs are lower.
The biggest drawback to using an ASIC is it is specific to one algorithm, whereas a GPU can be used to mine any coin. The risk of mining only one coin is very high – if the value of the coin plummets or developers decide to change the hash algorithm, the ASIC will effectively become useless.
Another disadvantage stems from the fact that the difficulty of mining a coin depends on the computing power of the network. Once an ASIC for a particular coin is released, the difficulty for that coin increases and the profitability of the ASIC eventually starts to fall.
ASICs in the future
Even if lots more Ethereum miners choose ASICs over GPUs, which seems unlikely given their high initial costs and coin-specific attributes, some people believe ASIC mining rigs will actually have a limited impact on Ethereum’s network.
Under a PoS model, new coins are assigned based on stakes held by each node instead of computation-intensive mathematical problems. This model would eventually put an end to mining on the Ethereum blockchain.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.