Is ASIC ideal for Ethereum mining?
China’s Bitmain has unveiled a new ASIC (application-specific integrated circuit) for Ethereum mining. Some analysts fear that this will take cryptocurrency-related sales away from Advanced Micro Devices (AMD) and NVIDIA (NVDA). Others feel that these concerns are overblown.
One of the arguments raised by the latter group is that the very design of Ethereum mining is ASIC-resistant. While ASIC is ideal for Bitcoin, which is centralized, it’s not ideal for Ethereum, which is decentralized.
Role of GPUs in cryptocurrency mining
Any cryptocurrency is mined by solving complex mathematical problems quickly. For this reason, miners have started using discrete GPUs (graphics processing unit), which are designed to perform mathematically intense, graphic-related tasks such as calculating vectors and shading pixels. However, GPUs also have other functionalities that are not related to mining. AMD and NVIDIA have developed crypto cards that remove these additional features from their GPUs.
In case of ASIC, the chip is designed to do a specific task or run a specific algorithm continuously in a more energy-efficient manner than a GPU. ASIC’s feature worked in the case of Bitcoin, as its base algorithm was fixed, which resulted in centralization. However, the centralization of Bitcoin mining pools created power issues and other security risks.
To mitigate this risk, a decentralized mining system was created for Ethereum.
How is Ethereum mined?
In Ethereum, miners have to compute data from smart contracts, and the network randomly selects the data to be computed. Hence, there’s no specific type of equation the miner has to solve. An ASIC can still be used to mine Ethereum if it’s placed close to a general-purpose computer that can run the software. Smart contracts have arbitrary code, which the software can leverage to solve the equation. ASIC can accelerate the working of the software while achieving energy efficiency.
However, to make Ethereum ASIC-resistant, another layer of complexity was added. The network can change the type of smart contracts, and if the network is flooded by a completely different set of smart contracts, ASICs are rendered useless because the software is etched into the silicon, which makes it non-upgradable.
During the Ethereum mining boom, the equations became more complex, and because of this, miners started using high-end GPUs with higher computational power.
The features of Bitmain’s Ethereum ASICs aren’t yet known, so we can’t say with certainty whether those chips will be able to substitute AMD’s and NVIDIA’s GPUs or not. Some analysts believe that investors reacted early to this news, as it is not even clear whether these ASICs are more efficient than GPUs or not.
Continue reading to learn about other analysts’ views on the crypto issue.