As long as Bitcoin leads the crypto market, being a miner is a popular strategy to earn passive income. ASIC is considered an entry ticket to join the crypto mining industry. In this article, we will find out what ASIC is and everything about it.
What is ASIC?
ASIC (Application-specific integrated circuit) is a specialized computing circuit that serves the purpose of mining cryptos on the Proof-of-Work (PoW) network. In PoW, a miner (a computer) has to solve encoded information blocks to earn crypto rewards. ASIC can be designed to mine a specific cryptocurrency, such as a Bitcoin ASIC or an Ethereum ASIC.
Since the advent of Bitcoin, there has been a race to create high-performance computers to mine crypto. Computers with higher performance (often measured by the hash rate number) have a higher chance of being the first to solve the block and earn the block reward.
In a 2021 report by Bussiness Insider, Bitcoin mining accounted for 0.5% of all electricity used all around the world, which was 7 times more than Google’s power usage. This is a rising controversial topic about whether this has negative impacts on the global environment.
Pros & Cons of ASIC
- Crypto mining will be easy work: Crypto natives with no strong technical background can join doing nodes in PoW blockchain without in-depth knowledge about computers. By understanding the hash rate, investors can calculate the block rewards to estimate the viability of the investment.
- ASIC enhances the blockchain in every term: ASIC will bring more nodes to the blockchain network since everybody can install an ASIC node at hand. The blockchain network will be more secure and decentralized as the number of nodes increases.
- Efficiency is a moat of ASIC to computers: ASIC is technically built to be more efficient than computers in terms of energy consumption and hash rate.
- Impacts on the Environment: Mining crypto consumes energy. Global warming is accelerating at a cautious pace. So there are many activities to raise concerns about whether mining crypto has negative impacts on the environment.
- Economy: Mining crypto needs lots of computing power from hardware that can be used for other more efficient purposes such as R&D. China has been a strong opponent against mining crypto. In the past, the country announced many regulations to limit crypto-mining activities. At its peak, China did a complete washout of crypto mining out of the country.
Specifications of AISC
- Manufacturer: Choosing reliable manufacturers can benefit in the long term since they can build durable products and support their customers.
- Size & weight: A network of ASIC can take up a lot of space in the room, and it might need to be moved to another spacious location.
- Noise level: In some countries, noise pollution is a serious concern. Making other people irritated by noisy sounds can get a fine or even convicted as guilty.
- Cooling system: As ASIC releases lots of heat, it is important to have a proper cooling system. Fans are widely used for ASIC. By determining the number of fans, investors can estimate the need for additional cooling methods like air conditioners.
- Power consumption: This might be the most critical factor that determines whether the investment is profitable or not.
- Mining algorithm & Minable coins: ASIC has the word “Specific” in its name. Thus, each ASIC is designed to mine crypto for a certain blockchain. The embedded algorithm inside an AISC is optimized for a specific PoW network. Therefore, it is more efficient to opt for an appropriate AISC.
- Price: The entry price to buy an ASIC is quite expensive, compared to the hardware market. But it can be an investment as investors can have a source of income generated from mining crypto. Otherwise, buying used or refurbished ASIC contains some risks. Investors should take into account all possible scenarios before launching the investments.
- Where to buy: Some ASIC devices are for sale in the U.S. market, and investors in other countries can only import them with high shipping costs. In some countries, miners have to pay tax for buying ASIC and pay environmental fees.
- Cloud mining: Like cloud storage, investors can buy/rent ASIC machines without having to maintain the setup.
Some notable ASIC
The list below just includes some ASIC while there are ASIC from other manufacturers, which might not be mentioned. Technology has been advancing and evolving at warp speed for decades. This makes computers faster every day.
How to choose ASIC
ASIC is a quite expensive device since it has extensive performance and high-energy consumption. To make sure it is a profitable investment when building a mining network of ASICs, we should take into account the following most fundamental criteria.
Which crypto to mine?
This is an important question for every miner. At the moment, there is a wide range of PoW blockchains that allow investors to mine crypto, such as Bitcoin, Litecoin, Ethereum, etc.
How big is an ASIC setup?
The more ASIC the mining network has, the more the hash rate it owns. However, it is an investment, and everybody has a different fund in the market. Therefore, the task is to weigh the risks, returns, and the time to reach the break-even point.
Where to set up?
ASIC creates noisy sound and emits lots of heat to the surrounding environment. Nobody wants to place a mining hub in the bedroom. Most investors prefer setting up ASIC in cold-weather areas to hot ones where it can make the hub over-heated.
In addition, ASIC is vulnerable to catastrophes such as earthquakes and floods. In 2018, floods in a China province devastated tens of thousands of crypto mining devices.
Even though ASIC is more energy-efficient than computers with CPU and GPU, it still consumes a large amount of energy power. Therefore, choosing good places where the power supply is stable is an important factor. Any electrical failure can cause damage to the devices and humans.
ASIC is not the only way to start mining crypto from PoW blockchains. Other miners still use a network of computers with cutting-edge performance CPUs and GPUs.
Join a mining pool
A mining pool is a collective group of crypto miners who see eyes to eyes on distributing block rewards proportional to their hash rate contribution. By joining this, miners can have a higher chance of getting rewarded.
FAQs about ASIC
Should we buy ASIC to mine Bitcoin?
Mining crypto is considered an investment or a business. Therefore, it always contains risks and rewards. By understanding what ASIC is and doing calculations, we might have enough information to answer this question.
Besides directly buying ASIC to set up by ourselves, investors can rent ASIC at cloud mining companies. Before any investment, we should do our own research and be responsible for our actions.
Where to buy ASIC?
Investors can buy brand-new AISC at retail stores where ASIC is listed for sale. Moreover, second-hand ASIC might be a juicy deal since we can get an ASIC at a reasonable price with acceptable quality.
ASIC is the best way to mine crypto?
As ASIC is discussed in previous sections, it has advantages and disadvantages over computers in mining crypto. However, there are tens of thousands of units using a series of GPUs to mine crypto. We can scale a network of ASIC fast by plugging it into a series.
ASIC can be failed during operation. It will be much harder to repair the machine since it is hard-soldered in a box. By contrast, a mining hub consisting of GPUs can be easy to detect failure and repair.
To conclude, ASIC is specially built for crypto mining activities. It has pros and cons for the blockchain and the market. Currently, there are hundreds of thousands of nodes using ASIC to mine crypto. Despite the drumbeat of negativities, crypto miners are still running to make their investors profitable in the long term.
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