What is an ASIC Miner?
ASIC stands for Application Specific Integrated Circuit. ASIC Miners are specially designed to mine one or a very specific number of crypto coins as effectively as possible. When mining crypto coins, computers must solve a very complex puzzle. The computer that solves the puzzle first is rewarded with crypto coins for doing so. ASIC Miners are the result of constantly improving computers to solve blockchain puzzles even more effectively. Because of their efficiency, ASIC Miners have become the industry standard for mining Bitcoin (BTC). Nowadays, there are also many other crypto currencies for which ASIC Miners are considered the best miners to mine these crypto currencies.
What is the difference between an ASIC Miner and a regular computer?
Theoretically, any computer can be used to solve the mathematical puzzles of a blockchain and collect the reward in the form of cryptocurrency. However, solving these puzzles is a race and only the computer that solves the puzzle first will receive the reward. The speed for solving these puzzles, or the computing power of a computer, is expressed in hashrate. Computers with a higher hashrate are more likely to be the first to solve the puzzle on the blockchain.
ASIC Miners are specially designed to provide the hashrate of miners to increase. regular computers can no longer compete with the specialized ASIC Miners.
Rob Chang, the founder and chief executive officer of Gryphon Digital Mining, says:
“The alternative, the more generalist machines, are no longer competitive against the ASICS, and so it is no longer economical to continue using these generalist machines.“
How does an ASIC Miner work?
Each blockchain has its own hash algorithm. For example, Bitcoin uses the SHA-256 algorithm. Ethereum uses the ETHASH algorithm. ASIC Miners are designed for one species hash-algorithm. If you want to mine Bitcoin and Ethereum, you need two different ASIC Miners. Each ASIC Miner can only do one hash algorithmuse and this hash algorithm must be the same as the hash algorithm of the coin you want to mine.
Why are there so many price differences between ASIC Miners?
ASIC Miners have a price range from a few thousand euros to tens of thousands of euros. The main reason why there is so much price difference between ASIC Miners is because of the hardware that is in the miner itself. Due to the years of chip shortage, it has become expensive to produce these miners. There is also another factor that plays a role in the price fluctuations of the ASIC Miners. There are only a limited number of manufacturers that produce ASIC Miners. When the crypto market is booming, there is more interest in ASIC Miners, but no more production. Scarcity drives up the price of the ASIC Miners. Bear Markets are pushing down the price of ASIC Miners. This may mean that it can be more interesting to buy an ASIC Miner during a Bear Market than during a Bull Market.
How Much Does an ASIC Miner Earn?
How much an ASIC Miner produces is determined by the costs for electricity consumption. There are several websites where you can calculate the average profit of an ASIC Miner. For instance:
https://whattomine.com/miners/
When purchasing an ASIC Miner, it is important not to think in the acquisition cost of the miner, but in euros per terahash. How much does an ASIC Miner make per terahash ? Once you know what the purchase costs and usage costs are, you can calculate a Return of Investment (ROI) point. Another thing to keep in mind is that most miners join a Mining Pool.
ASIC Mining with a Mining Pool
Even with multiple ASIC Miners, there is an incredibly small chance of being the first to solve the puzzle on a blockchain. At the time of writing, the Bitcoin Network has a capacity of 190 exahash (one million terahash). Suppose you have an ASIC Miner with a capacity of 18 terahash per second, you would still only have a one in 10.56 million chance of being the first to solve the puzzle. To increase these chances, most miners join a Mining Pool. In a Mining Pool, the hashrates of all miners in the pool are combined and the chances of being the first to solve the puzzle are increased. The reward is then distributed in the pool based on what each miner has contributed to the pool.
Is ASIC Mining Worth It?
Whether an ASIC Miner is worthwhile depends on your personal situation and your energy rate. In general, Bitcoin ASIC Miners are not worth it. For example, in 2021, a report showed that Bitcoin mining consumes 91 terawatts of power annually. To put this into perspective… this is more than the power consumption of the whole of Finland, which consumes 86 terawatts of power annually. It is estimated that the power used to mine Bitcoin is 0.5% of total global energy consumption.
ASIC Miners are more energy efficient than other Bitcoin Miners, though, because ASIC Miners can convert the same amount of energy into a higher hashrate. This theoretically lowers the total amount of energy it takes to mine Bitcoin. Another big concern about Bitcoin mining is that most Bitcoins have already been mined. Of the market capitalization of 21 million Bitcoin, almost 90% has already been mined. Unless the limit for Bitcoin changes, the last Bitcoin will be mined in the year 2140.
What does the future hold for ASIC Miners?
The conditions for mining Bitcoin are no longer ideal, but that does not mean that ASIC mining is completely obsolete. There are more and more green alternatives to power ASIC Miners. At Miners Netherlands, for example, we are setting up Mining Parks in Norway and Finland where all miners will be provided with green hydro energy. People are also increasingly using the surplus of solar panels to mine crypto coins.
There are plenty of ways to provide an ASIC Miner with cheap(er) and green energy. There are also more and more ASIC Miners on the market that can mine other coins than Bitcoin. A number of promising altcoins are emerging, such as Kadena (KDA) or Litecoin (LITE). There are currently many stories on YouTube of miners who earn thousands of euros per month mining Kadena, thanks to the Bitmain Antminer KA3.
