What is the difference between ASIC and GPU cryptocurrency mining?

ASIC and GPU Cryptocurrency mining

Date Published

05/01/2018

Whether you are an established crypto miner, or just starting out, the question of whether to use ASIC or GPU typically arises. We here at Compute North are going to break it down for you. When mining for Bitcoin, Ethereum, Litecoin or another altcoin, is it better to buy ASIC or set up a GPU mining rig?

Both GPUs and ASICs are the highly preferred mining hardware available today. With a GPU, a graphics card solves complex algorithm whereas in ASIC, a chip solves the complex algorithm, both in order to gain rewards. The basic difference is that while GPUs are fast, ASICs are much faster. But while GPUs are relatively flexible, ASICs are limited to a narrow set of functions. Coin mining algorithms determine what ASICs can mine and what GPUs can mine.

Before we dive into the GPU vs. ASIC debate, let’s first make sure there is a clear understanding of what cryptocurrency mining is.

Unlike trading in cryptocurrency or simply buying coin, cryptocurrency mining is a process where specialized computers are used to find blocks by solving extremely complex math problems. The work done to solve these difficult math problems is also known as Proof of Work (PoW). By solving the problem, crypto miners receive the right to add a new block to the existing blockchain, which in turn legitimizes the transactions. This confirmation of a transaction is needed to prevent problems commonly associated with cryptocurrencies like double spending. When this work is completed, the miner gets the particular coin as a reward or incentive for the effort and hardware used.

Mining difficulty becomes harder and harder as the number of miners increase. For some coins like Bitcoin, the block reward is halved at fixed intervals. For example; the next halving of Bitcoin block reward will happen in 2020. In short, mining becomes more difficult and less rewarding over time for two reasons – more miners join the effort and the number of coins left to mine decreases, much like mining for physical resources.

In the initial years of Bitcoin’s launch, mining could be easily done via any computer component that had the right amount of processing power and memory. But as mining evolved, the need, speed and technology changed, resulting in a competitive race that ousted incompetent mining hardware.

Initially, home desktops were more than enough for cryptocurrency mining. Over time, miners switched to GPUs for more hashrate and CPUs became obsolete. You can still mine using older methods, but there will be insignificant profitability and hence useless effort, meaning your electricity bills will rise but profits will be minimal at best. Currently, there is specially designed hardware available for mining known as GPUs and ASICs. Some coins, however, are ASIC resistant and can be mined using GPUs only.

The two major considerations to help determine the best mining hardware to use are Return on Investment (ROI) and electricity efficiency.

Let’s get down to the pros and cons of both ASIC and GPU mining.

ASIC Mining: Application-Specific Integrated Circuit

ASIC mining is a microchip specifically designed to execute a hashing algorithm as quickly as possible. To give you some perspective on how powerful ASICs can be, a Bitcoin ASIC can calculate hashes 100,000 times faster than even the best CPU.

ASIC is generally more advanced and more powerful than CPU and GPU mining so it has a significant edge over other devices in the mining race. ASIC-enabled mining equipment is capable of outperforming other equipment in terms of speed and efficiency in finding blocks. Miners using this are making greater profit since they are working with superior computational power.

ASICs are custom built for a single hash algorithm. Therefore, you need to buy different ASIC for each coin you want to mine.

Currently, there are several companies, such as Bitmain and Canaan, that design ASICs. Due to their custom nature and niche application, a powerful ASIC is more expensive and not always easily obtainable. For high-end hash power, a single ASIC can cost more than $3000.

Performing trillions of hashes per second comes with some downside. Due to the intense hashing, ASICs give off extreme heat and always require proper cooling. Cooling the chips effectively requires fans which make a lot of noise. Just take a listen: .

And with great power comes great electricity usage. ASICs will cost a significant amount in electric bills, although keep in mind that they are typically more affordable to run than GPUs.

Another negative with ASICs is that they have a short lifespan, and any change in a hashing algorithm for a particular coin can make them obsolete overnight.

On the plus side, ASICs are as close as it comes to Plug and Play. ASICs are pre-built setups and have very minimal issues at the onset. They do, however, have no resale value –  once they become obsolete they are trash. The warranty usually offered on them is very short, typically only a few months, compared to a GPU which can have a warranty of 2 or more years.

The Fight Against ASIC Mining

Some altcoins like Monero have taken steps to make mining with ASIC useless. For example, Monero recently had an emergency hard fork. This was a hard fork without creating a new coin –  only for adding new features and upgrading code for better performance. This hard fork made Bitmain’s ASIC mining equipment useless. Look for more altcoins to do the same as Monero has done.

Compounding the issue is Bitmain, a Chinese hardware manufacturer, has what many in the industry consider to be a monopoly in manufacturing ASIC mining equipment with strong patents in place. They maintain about 50% of the mining hash power of the overall Bitcoin network. Bitmain is becoming more powerful and highly profitable due to the advantage they hold with their highly efficient mining hardware. This has led to the centralization of the Bitcoin mining process, taking away mining power from the “common man”.

In the case with Monero, they have countered Bitmain’s monopoly by changing their Proof of Work to discourage miners from mining Monero. The main reason Monero has implemented these changes is to keep with the ultimate goal of decentralization.

GPU Mining: Graphics Processing Unit

Although not as potentially powerful as ASIC, GPUs are more flexible in their application. The GPU is the chip on your graphics card that does repetitive calculations, typically used in most computers for processing graphics. While GPUs are used for mining cryptocurrencies, they’re often used in gaming computers as well. A GPU mining rig typically consists of a group of GPUs working in a computer setup. The more GPUs, the more hash power.

One of the main benefits of GPU mining is that they are much more flexible in the coins they can mine, plus they can mine multiple cryptocurrencies.

Unlike ASICs, they are much easier to buy and are more readily available. They also have good resale value. GPUs typically come with a strong warranty and can be used as a multipurpose machine – perfect for gaming, video editing and other heavy processing purposes. GPUs use less electricity and will run at lower noise levels, allowing you to use them in your home and eliminating the need for extra cooling equipment.

GPUs fall short in the fact that they can be complicated to configure. A GPU cannot perform on its own, so you will need to build a fully functional computer before you can start mining. Components such as wiring, a CPU case, a motherboard, RAM and SSD have to be purchased separately, adding to the overall cost of your mining operation.

Final Conclusion

The final choice is yours. There are pros and cons for using both ASIC and GPU to consider. Select the right crypto mining equipment based on what’s best for you and your situation and according to your circumstances – electricity cost, where you can house the equipment, your familiarity with computers and your skill level at building a proper system to mine.

If you have a large equipment budget, access to very low-cost electricity, and you are comfortable at sticking to one coin for the long run, then ASIC mining is by far the best choice. However, if you want flexibility and freedom to mine a variety of coins, GPU mining may be a better choice.

Finally, the main reason for the use of cryptocurrency and blockchain technology is about becoming decentralized. Everyone who wants to participate in this movement should have the pleasure of supporting the blockchain technology by being part of the actual blockchain, as well as being a miner. This was the goal of Satoshi Nakamoto back in the early 2000s when he designed Bitcoin and devised the first blockchain database. As a miner, not only can you earn some coin, but you can be a part of this new system, so learn as you go and have some fun with it as well.

Date Published

05/01/2018

Author

First Scribe

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