ASIC Miners For Ethreum Are Finally Here
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Cryptocurrencies are steadily revolutionizing the way financial systems and financial transactions work. Ethereum which was originally released on the 30th of July 2015 by Vitalik Buterin, a Cryptocurrency researcher, is an open software platform based on the blockchain technology that enables developers to build and deploy decentralized applications.
Ethereum presents a universal application of blockchain technology. It can support many different types of decentralized applications. Miners and investors alike have made huge sums of money on the rise of Ethereum.
Mining is the participation in the validation of transactions that takes place in order to confirm all activities in the Ethereum blockchain. Ethereum developers are currently working on the implementation of the Casper protocol which moves Ether to use proof of stake algorithm. which wastes far less computational power to achieve the same end as that of the proof of work used in the mining of bitcoin. It is a better alternative to the proof of work algorithm used by the Bitcoin. Due to Ethereum’s high popularity and demand, Ethereum mining difficulty is at a current peak.
Ethereum ASIC Miners – Bitmain develops Ethereum ASICs
With Ethereum having the second largest market cap after bitcoin, new and innovative systems are being created by tech companies to cater for the efficient mining of Ethereum which brings us to talking about the use of the application specific integrated circuits.
A Twitter announcement on the 3rd of April 2018 by the Chinese technological giant “Bitmain” informed that the much anticipated and awaited Ethereum ASIC miners would be released. The Ethereum ASIC is will be named “Antminer E3”. It is important to know that ASIC miners wouldn’t be capable of mining Ethereum before Bitmain made the announcement that they are making an ASIC miner for Ethereum. Mining is a term for a resource intensive computing process that basically involves solving a number of mathematical problems that results in the desired solution when plugged into a hashing algorithm. This value solves a block of transaction data which in turn is added to the blockchain. A miner receives a reward in Cryptocurrency coin or token for this work, and these hash based algorithms are called proof of work algorithms. Most major Cryptocurrencies use a unique proof of work algorithm.
There are different reasons to choose a proof of work algorithm over another but when it comes to ASICs, it comes down to memory requirements. A number of Cryptocurrencies have been taken over by ASICs except for Ethereum which requires a lot of RAM to run their hashing algorithms. Central processing units and Graphics cards are chips that can be used for a wide range of tasks, but what these types of chips lack in raw efficiency, they make up for in their ability to run processes that require a lot of memory. RAM slows down ASICs, so algorithms that make use of lots of Random Access Memory (RAM) generally stave off the influx of those specialized chips. Hence, these algorithms are called “ASICs resistant”
All ASIC hardware which has proven to be very effective when it comes to mining Bitcoin could no longer be used for Ethereum. Due to this mining of ether was limited only to the Graphics Processing Unit (GPU). Although recently, the development of mining Ethereum with ASIC has changed the narrative.
So what is Ethereum ASIC mining and how does it work?
First, we need to know what an ASIC is. ASIC stands for “application specific integrated circuits” and the main difference between mining with ASIC and mining with graphics and computer processing units is that the mining with ASICs do not have all the extra appliances that make the mining graphics processing units and computer processing units so versatile, hence, being called “application specific” chip.
This is to say, you can’t play a game nor run an operating system on an ASIC Ethereum because the chip is meant to do only one thing which is to mine crypto. The Ethereum ASIC miner gains its efficiency because all its computing power and resources is optimized for a single well defined task. Mining Ethereum with ASIC was achieved by Bitmain through the hardware being modified to overcome the memory hardness of Ethereum. This also means Ethereum ASIC would work on the network of other coins that uses the same algorithm as Ethereum; an example is “Ubiq”.
The Antminer E3
The Antminer E3 will conduct ASIC Ethereum mining at 180MH/s with a power consumption of 800W and at a current price tag around $2000 (changes every batch). There is a Return Of $6.13 per day, with an estimated power cost of $2.30 per day (depending on where you live). It uses the Ethash algorithm. There is a limit to purchase to ensure more buyers worldwide. The user would need an ATX power supply unit with a 6 pin PCIe connectors and the ones on the hashing board need to be connected to the PSU for the hashing board to operate.
What does this mean for Ethereum?
With this development, the ASIC development and centralized hash power are currently in the hands of Bitmain tech, they hold the card to the future of Ethereum. What it means is that they take away the current decentralized nature of consensus and Ethereum network governance. The release of the Antminer E3 has intensified calls to execute an Ethereum fork which is altering their hash algorithm to keep it ASIC resistant.
It is important to know that other companies are also working on new generation ethereum ASIC miner. In response to this groundbreaking revelation of an Ethereum ASIC miner, there has been rumor that the Ethereum foundation network is planning to block the use of developing ASICs by making protocol changes to make developing ASICs incompatible with the proof of work Ethash algorithm. Our fingers are crossed as to what step and directions Ethereum is likely to take. The release of the Ethereum E3 will almost certainly lead to centralization in the Ethereum network. The more centralized the network, the more vulnerable it is to malicious attacks. Also, it might lead to Ethereum dropping down the pecking order as a valuable Cryptocurrency.
What does this mean for miners?
The release of the Ethereum ASIC miner could badly affect the mining related demands for the Graphics processing unit by miners. This would also affect the profits made by graphics processing units’ manufacturers. The Ethereum ASIC miner will likely have a repeat of the trend of the Antminer S9 by rendering GPU miners obsolete.
Since the Ethereum ASIC miner is more powerful and effective in mining than the regular GPU miners, it is definitely going to give Ethereum mining a new architectural structure. One positive aspect of Graphics processing unit miners is depreciation, just like any ASIC miner out there; an E3 miner is worthless once it is no longer useful for mining. But since GPUs have a good secondary market, gamers are likely to get their graphics cards back. The reaction of the community to this miner is out of concern and fear of centralization of the Ethereum network which could have adverse effects on their profits. This is why the called for an Ethereum Hard fork is on the rise. With recent partnerships to increase the number of smart contracts executed on the Ethereum network per seconds, an Ethereum Hard fork might just be inevitable.
What are ASIC resistant Cryptocurrencies?
The key mechanism that lies behind any Cryptocurrency is the blockchain. Blockchain was created to guard against centralization meaning there is no centralized power to control anything. The blockchain is the public ledger where transactions are recorded and then verified by the miners that solve the block using their computational ability. There is a danger to the network when a hostile entity takes over more than 50% of the hashing power. The original vision of the founder of bitcoin was to have everyone contribute fairly to the bitcoin network to it can remain decentralized.
The introduction of the application specific integrated circuits (ASIC) miners which can mine Cryptocurrencies faster while wasting lesser energy than the CPUs and Graphics processing unit has created a power shift in the crypto network leading to centralization where small time miners cannot thrive. The ASIC miners are algorithm specific, for this reason, there can be ASIC resistant Cryptocurrencies which come about by the network simply changing the fundamentals of making an upgrade of the base algorithm.
How is ASIC different from GPU?
So what differentiates the ASIC from the GPU? Well, the application specific integrated circuits (ASIC) is different from the Graphics processing unit (GPU) in the sense that it is only made for one specific purpose which is mining and cannot do any other job apart from that. It is not a general purpose chip like the GPU which is the reason why it is more efficient at mining compared to the graphics processing unit miners.
The ASIC miners are also produced in short supply which makes it a driving force in the centralization of the Cryptocurrency network, unlike the GPUs which are readily available for purchase and can be used by almost everyone with the network resource to mine.
It can easily be redundant with no secondary market if the mining algorithm of the digital currency is altered, unlike the GPU which can still sell in the market for other uses.
A miner would generally opt for the ASIC miners as they are more efficient and yield higher returns than the GPU miners. The aim of digital mining is to make a profit, isn’t it?
The announcement of ASIC miners for Ethereum is a big deal because this could lead to centralization of Ethereum on the long run and in turn, have an adverse effect on the price of Ethereum. Also, miners in the Ethereum network are caught between buying the new ASIC miners and hoping for a hard fork.
In a Nutshell
As more miners join the Ethereum network, mining difficulty increases, which is why it is currently costly to mine Ethereum. Mining hardware is expensive and returns are low. Inexperienced miners might do well not to venture into Ethereum mining at all. As it is better to just buy Ethereum through exchanges as it is.
The arrival of the application specific integrated circuits for Ethereum mining should be a thing of great concern to the entire Ethereum network because the companies producing the ASICs in a bid to make money, would continue to crack the algorithms to produce new ASIC miners putting Ethereum at risk of centralization. The arrival of the ASIC will change the face of Ethereum forever as we can only fold arms and observe what unfolds.
If the trend continues, miners looking to make some profit might need to trade Ethereum for some other Cryptocurrency in the market. However, Ethereum might be worthwhile in the future as the price continues to rise.
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