Mining is the backbone of the digital currency ecosystem. Whether it’s Bitcoin, Ethereum, Ethereum Classic, or Zcash, any and all forms of digital currency must be mined into existence. It’s through mining that transactions are verified, blocks in the blockchain are created, and new coins enter the network.
Digital currency mining is an energy-intensive process that requires vast amounts of energy and computer resources. Luckily, these costs can be at least partially offset by strategically placing mining facilities in environmentally-friendly countries like Iceland, where power is generated from renewable sources.
However, good equipment is a requirement for profitability in the digital currency mining game. Long gone are the days of CPU mining in a garage or basement. These days, digital currency miners debate between Graphics Processing Unit (GPU) and Application-Specific Integrated Circuit (ASIC) mining to determine which is more effective.
But what exactly does GPU and ASIC mining entail? And what are the key differences that miners need to consider before deciding which method to employ?
What’s the difference between ASIC mining and GPU mining?
GPU mining utilizes graphics processing units (GPUs) for the power needed to solve a cryptographic hash. GPUs are found in the video cards of desktop and laptop computers. Before digital currency, the driving force behind increasingly efficient GPUs was video game innovation. High-intensity video games with realistic graphics require a lot of power from a GPU to render in-game graphics without lag.
Similarly, graphic designers, 3D modelers, and video editors utilize high-powered GPUs to perform their jobs faster and better. The power within a modern GPU can also be used for mining digital currency and is a common choice for even industrial-scale miners for reasons we’ll get into in just a moment.
ASIC mining utilizes an Application-Specific Integrated Circuit (ASIC) for mining. This is an integrated circuit that’s designed with a single purpose in mind. ASIC miners seek to mine digital currency with a high rate of efficiency, but with limited additional functionality.
There are many factors at play in determining whether GPU mining or ASIC mining is best for an industrial mining operation.
GPU vs. ASIC mining: the pros and cons
As we’ve mentioned, GPUs are standard hardware in personal computers. This means they fit into standard motherboards. Because of their wide variety of uses, competition remains high among manufacturers, like NVIDIA and AMD. This has led to increasingly powerful GPUs, all of which are available at reasonable prices.
GPUs can easily be replaced and upgraded within a mining machine, making for a low-cost rig. After upgrading the GPUs in a mining rig, the video cards in which they are housed can be resold for a substantial portion of their value, unlike ASICs. This is because the multifunctionality of GPUs suit a plethora of needs. BIOS upgrades are also part of the game with GPU mining and can substantially increase performance even without changing hardware.
GPUs have multiple purposes within the realm of digital currency. GPUs can be used to mine a variety of different digital currencies, even in line with evolving company strategies, without any need to replace hardware.
Some digital currencies, such as Monero, prevent ASIC mining by instituting consistent updates, making it impossible or simply too costly to create ASICs for the network.
On the other hand, GPUs are less powerful or efficient than ASICs and are usually larger in size. Furthermore, some digital currencies cannot be mined for any substantial profit using GPUs alone. GPUs also require more power to run, but this can be offset by operating in low-cost energy areas.
Only a few companies create ASICs, and this keeps competition low and prices high. Starting with ASIC mining often requires a massive initial investment for any chance at profitability down the line.
ASIC hardware must be specifically created for the type of coin it mines. A Bitcoin ASIC is practically worthless for mining Litecoin, for example, and vice versa. This means any change in company or mining strategy will require an investment in new hardware. Similarly, when a new ASIC version is released for a coin, the necessary hardware upgrade can be incredibly costly. Because of the need for upgrades, the lifespan of an ASIC is relatively short compared to GPUs.
While the ASIC is still the newest in its line, it provides the highest hashrates for the coin it is mining. An ASIC also offers more efficient power consumption, resulting in higher profitability. Additionally, ASICs are generally much smaller than GPUs because they don’t require standard hardware. This allows a mining company to house a lot of mining equipment in a relatively small space compared to what would be needed for GPU miners.
When an equipment upgrade is needed, it involves replacing the entire ASIC. Old ASICs can generally only be sold for a tiny portion of their original price. Because the ASIC has no other purpose than to mine a specific coin, the product becomes mostly useless after an updated version has been released. Obsolescence is always a concern with ASICs, not only due to new versions of the system but also because of the potential for change of a hashing or calculation algorithm on a network
This is the way Monero goes about preventing ASIC competition. They’ve sworn to implement a minor algorithm change at least every six months to create a cost-preventive environment for would-be ASIC creators for the network. Bitmain developed an ASIC miner for Monero, but the network immediately released a change to make the ASIC obsolete.
Why would a network want to prevent ASIC mining?
Because ASIC mining by its very nature requires specialized and costly hardware, it opens a network up to centralization at the hands of a few very rich, powerful people. Similarly, ASIC mining could open a network to a 51% attack. Such an attack is unlikely on a major network like Bitcoin (which allows ASIC mining) due to the sheer amount of resources it would require. This type of hack is mainly a concern for smaller networks.