First Ethereum ASIC

I began my journey in cryptoland in 2014, mining with two gpu’s in my student room, electricity included in a fixed monthly charge. At that time, first ASICs arrived on the market for Bitcoin mining, outranking our beloved graphic cards. Then I crossed my path with Vertcoin, one of the these PoW blockchain arguing to be ASIC resistant by design.

By that time, I misunderstood proof of work, mining and the complex incentives behind it. Like most of people I thought ASICs was evil, destroying decentralization by keeping us, common people, out of the mining game.

Naturally I came to think that ASIC resistance was a solution to keep mining decentralized, letting everyone with a simple graphic card the possibility to taking part to the mining effort and earn substantial gain. ASIC resistance is the willing to pushing away big miners from the unfair advantage procured by their expensive and unfair ASICs.

The narrative behind ASIC resistance stands by few assumptions :

ASICs are too expensive thus limit the access to mining only to rich individuals or specialized companies.

ASICs are in the hands of only one manufacturer.

ASICs leads to centralization of mining power

And back in these days it was partly true… but things have changed radically.

ASICs are not expensive anymore

ASIC manufacturers came from a long way to provide the market with the best technology available in micro electronics. Going from 130 nm to 10 nm was a hell of a ride for competition. Massive investments coupled with high demand of mining hardware let very few providers still standing. This led to a high selling price for ASICs and a need for miners to reinvest every 6 months to keep the best efficient hardware.

Since ASIC technology hit the wall of Moore’s Law in 2016, it brings some air to miners. Competition in the chip industry is staring at the massive profit of Bitmain and seems on the track to enter the game. From a competition led by technological capacity to pack more and more transistors in a single chip, it transformed to one led by cost efficiency of assembly lines and capacity to lower the selling price of hardware. We can observe now since Halong mining enter the party with its Samsung chips, that Bitmain hardware prices plummeted, trying to asphyxiate other belligerents. (adding the fact that sales are probably decreasing due to lower prices of Bitcoin and cryptos in general)

Bitmain shop in May 2018

ASIC mining is finally affordable for every purse, starting to mine is even cheaper with ASICs than with GPU (taking into account motherboard, GPU, etc)

GPU mining need more technical skills than ASIC mining

GPU is still considered to be the solution for the common people to access mining. Having solid background in IT didn’t make me realize back then, when I played with my rig, how technical and not straight forward GPU mining is. Choosing the right card from the right provider, the right graphic driver which does not destroy your performance, spending hours in forums and testing each parameter to get the best hashrate from your cards. Monitoring temperature to avoid bad hashes… I have to admit I enjoyed this part, but years later when i ran my first ASIC, I was surprised by the ease of use(I still managed to brick it but it’s another story).

A kick comparison between software interfaces gives you an idea.

GPU mining cgminer interface

ASIC Antminer S9 interface

From this perspective, mining with ASIC is technically easier thus more egalitarian in it’s access.

GPU mining isn’t more decentralized than ASIC mining

By referring to the excellent work done by Balaji S. Srinivasan in his article Quantifying decentralization, we can compare mining decentralization of Bitcoin which is ASIC mined with Ehereum which is GPU mined.

It appears that Ethereum is more centralized than Bitcoin from the mining point of view. I know this subject is hot and many discuss the methodology. And I don’t really care who wins at the end, I just observe that it’s comparable. It’s not surprising because the same mechanics applied in both chains. Miners need to find the cheapest electricity and those with high volume of hashing power can reduce some costs, making them more profitable than small miners. Since technology of GPUs and ASICs are limited by engraving capabilities of semiconductor foundries, the difference in terms of obsolescence is very thin between them.

Both GPU and ASIC mining are in the hands of corporate grade miners for big PoW cryptos.

Which one is the more decentralized between these two mining facilities ?

GPU mining facility

ASIC mining facility

Proof of Work chains more secured with ASICs

Now let’s think about economic incentives in Proof of Work algorithm.

When we think about attacks on the protocol by miners, we think about selfish mining, 51% attack, feather forking, etc… But even if pure game theory predicts these attacks are profitable with sufficient hashing power we know that miners will be punished by the market when the price will drop after loosing confidence in the protocol if one of these attacks occurs.

But punishment is drastically harder for ASIC miner than for GPU miners. Because if the value of the token from the attacked blockchain drops to zero, ASIC miners will be stuck with junk hardware. In most of PoW algorithms, there is only one coin worthy to mine for, and if it’s value plummets, all capital is lost, no one will want to buy this hardware anymore.

With GPU mining, punishment is way lighter, this highly versatile hardware can be used in many coins which are still profitable. Besides, the hardware is used for gaming or AI, so it will always keep substantial value.

ASIC mining demands higher capital commitment than GPU mining, they are more incentivized to act honestly. A chain secured by a mature ASIC industry is more secure than a GPU one.

ASIC resistance (in)efficiency

The short history of mining shows that ASIC resistance doesn’t last forever. We saw one by one, every claimed ASIC resistant crypto currency eventually having his ASIC on the market. (Ethereum, ZCash, Monero, …)The only difference between ASIC friendly and unfriendly algorithms lies in a bigger price for the latter. This high price will not stop big miners with big capital from buying these. Only common people (which are supposed to be protected by this design), will be prevent from participating in this mandatory upgrade.

An extreme solution chose by Monero is to hard fork its network in order to change the mining algorithm. But it’s hard to tell who will suffer the most from this. The coin or the ASIC manufacturer ? Time will tell.

Conclusion

It’s time to end this article with some chill for GPU miners. As I mentioned earlier, ASIC production is largely monopolized by Bitmain, which is a real problem of the ASIC mining scene. I acknowledge the rise of Halong mining and new players, but this new competition needs to be confirmed. It’s moving on the right direction for now. GPU has more manufacturers and real competition which is always safer. But furthermore, GPU still has their purpose. They represent the rite of passage for every new Proof of Work crypto, or more seriously they are the only hardware available for nascent coins, and can start to secure them. ASICs demands research and investment from manufacturers. It’s only when a coin gains some maturity and value that a manufacturer makes the effort of developing an ASIC, taking it’s security to the next level.

For me it’s clear that ASIC resistance has not fulfilled its promises, facts are getting harder and harder for its supporters. It’s even worth considering if ASIC resistance is not after all a bad move for a Proof of Work crypto.