The Difference between ASIC and GPU Mining

September 4, 2019 - Expert Commentary, How-To Articles


The Case for Bitcoin

Bitcoin (BTC), the modern-day digital gold, is hovering around the $7,500 mark. Mid this year, the pioneer crypto rallied to an impressive $14,000. This rally was reminiscent of the one in late December 2017. That’s when it surged to $20,000 before the U.S. Commodities and Futures Trading Commission (CFTC), a regulating agency, together with the Treasury and the SEC, reportedly popped the crypto bubble by failing to approve Bitcoin Futures. 

Undeterred, the cryptocurrency community continues to innovate, unleashing efficient solutions that make the system more resilient and secure. Bitcoin is by far the most secure blockchain application. The network relies on thousands of miners scattered across the globe, gifting it a market valuation of over $135 billion. 

The Shift to ASICs in Bitcoin Mining

As a cryptocurrency that set decentralized finance in motion, how Bitcoin fared was vital for the relevance of subsequent projects. Bitcoin security is guaranteed by dedicated, decentralized money-expending miners. With distribution, an array of benefits is availed to the end-user. 

The network is powered by miners using specialized chipsets called Application Specific Integrated Circuits (ASICs). These are finely tuned processors that, in cryptocurrency mining circles, funnel “work” in Proof of Work (PoW) consensus algorithm systems. Notably, ASIC rigs can also serve other purposes. Examples are image processing and use as a modem. These depend on the needs of the user. 

However, Bitcoin miners didn’t always deploy ASICs. Their use was just a natural response to the increasing Bitcoin difficulty as more people plugged in. Luckily, Bitcoin evolution, not just Bitcoin Improvement Proposals (BIPs) but deployed gear, has been completely documented throughout its 11 years of existence. Therefore, it is only natural for a curious investor to learn how the evolution happened. 

In doing so, differentiating between ASIC and GPU mining is the first step. And that distinction is exactly what this section seeks to accomplish.

ASIC Vs. GPU Mining: The Difference

In technology, the only constant feature is change itself. Therefore, prospective miners are on the lookout for the best gear where they can have an advantage over competitors. As Bitcoin became popular, more people downloaded the Bitcoin client and channeled their computing power to the network via ordinary computers. The result was the rise in difficulty, which meant the Central Processing Unit (CPU) mining became unprofitable. This problem paved the way for GPU mining. 

A General Processing Unit (GPU) is a universal processor packed with more computing power than ordinary CPUs. These processors can handle more sophisticated graphics and higher processing power than ordinary CPUs. That level of flexibility means GPUs are highly adaptable and can simultaneously mine a wide variety of coins, ensuring stable rewards. In the days ahead, considering the rise of ASIC-resistant algorithms, the shift to GPUs could be an edge. 

Aside from crypto mining, GPUs can have secondary purposes, like image processing.  However, GPUs are not as cheap as thought. They could be cheaper than ASICs, but setting up a mining rig demands several GPUs for profitability. Return on investment could be lower, but a correct combination of correct drivers, proper configuration, and software brings more autonomy. At any moment, a miner can simultaneously deploy his/her GPUs to mine coins in different networks, an advantage over specialized ASIC and other tethered alternatives. 

On the other hand, an ASIC is a microchip (integrated circuit or IC) that is designed to calculate the hashes of a given network’s algorithm specifically. The hash, in this case, can be SHA 256, Scrypt, X11, and so forth. The Application Specific (AS) bit of the above acronym means the microchip is designed for one purpose only: calculate as many hashes as possible for mining cryptocurrencies.  And they are unsurprisingly incredibly efficient in doing their work as designed from the ground up.

An ASIC miner is a mini-computer designed to mine a particular coin whose network uses a specific algorithm to generate cryptographic hashes. Think of ASICs as special “Bitcoin generating” computers. A typical ASIC miner has several processors, just like those on your computer. There are three main types of processors-and you need not ask the seller when buying an ASIC miner-:

  • Fully customizable ones, which excel at performing one task only. This task can be cryptocurrency mining. 
  • Semi-customizable; the manufacturer can change depending on the network’s algorithm.
  • Platform processors- These work to set customizable criteria.

For this reason, the SHA-256 ASIC designed to mine Bitcoin cannot be used in Scrypt-based coins such as Litecoin.  Compared to GPU, ASIC miners are faster and more efficient. Their overall objective is to ensure faster calculation, which translates to more rewards. 

Bitcoin ASIC Mining: The Good and the Bad

For perspective, an ordinary ASIC can calculate 100,000 times faster than the best CPU. Simply put, ASIC, for what they are, represent power and specialty. In a competitive world of Bitcoin mining, the race for the best bitcoin mining hardware means securing only the best ASIC mining rig. For good reasons, every 10 minutes, the Bitcoin network releases $87,500 worth of BTCs. 

These coins fluctuate in value depending on market forces. The good news is that the observed speed of development means that ASIC miners are easy to install. They are near Plug-and-Play, shipped in pre-built setups but sold with very shorter warranty periods, often spanning only a few months.

The high computational power offered by ASIC miners is countered by high energy consumption used by the inbuilt high-power fans for cooling. With fans, there is noise, and therefore, attenuation is required. Although energy efficiency is something that can be fine-tuned and improved over time, the cost of electricity, a utility, is high and varies between countries and power generators. 

Also note that as better ASIC miners are released, it means the network’s difficulty is readjusted higher so that there is no disruption, and as designed, every 10 minutes new BTCs are released as rewards. It is a delicate balancing act that miners, investors, and observers, kept an eye on. Furthermore, obsolete ASIC’s resale value is lower than GPUs. That’s not forgetting the ever-present risk of changes to the underlying algorithm that would effectively render ASICs useless. 

The gravitation towards efficiency and complete decentralization with certain networks as Ethereum and Monero shifting towards ASIC-resistant algorithms pose a risk. A tweak of the network’s algorithm activating ASIC-resistant code could spell a disaster to millions of miners heavily invested in the sector.

In systems where ASICs fit, they dominate completely. New versions are released every now and then, and because they are up-to-date, they mine coins more efficiently and profitably. Because of this, there is a risk of miner centralization. This scenario is more dire when big mining pools whose workers use the latest ASIC devices for profit maximization channel their computing power, bulldozing off others with older, inefficient miners. 

The Bitcoin community is worried about the risks posed, but ASICs offer security. Further, since “work” is tied to electricity as aforementioned, the network difficulty paints a picture of how much power has been expended by mining rigs. The higher it is, the more economically prohibitive it is for an attacker to even contemplate. 

ASICs is Bitcoin’s Security, Indispensable For now

Ultimately the choice is yours. It’s not that you can’t profitably mine Bitcoin with a GPU, even if you overclock. It will be a futile attempt since the Bitcoin’s mining difficulty is sky high, rendering GPU deployment useless. If you are serious and really pumping to mine Bitcoin, ASIC miners would be your top choice. It is for this specific reason that VBit Technologies, a hardware mining provider with Bitcoin mining facilities in Colorado, and Alberta (Canada), use the latest ASIC miners in their operations. VBit Technologies launched in May 2018 after obtaining operating licenses in the United States, right in the middle of the devastating crypto winter, but are set up to thrive even in price-depressing scenarios.

For Bitcoin enthusiasts keen on contributing and securing the network, they can purchase different hash rate packages and let the money do the work legally and transparently. The Sign up process is free and easy. For example, purchasing the Diamond package for $20,000 will yield a take home of $139,222 if Bitcoin trades at $10,400 in year 5. What’s cool is that you can project expected gains using the on-site Bitcoin mining calculator. Your gear is fitted with the most efficient miners in the industry, meaning the return on investment will always be high.

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