ASIC stands for Application-Specific Integrated Circuit, which is specialized hardware in the field of electronics designed to perform a specific operation of the manufacturer, such as collecting data about sound, performing audio processing, etc. The application of its chips in the early days was mainly to make processors for mobile phones, processors in automated machines, vehicles, spacecraft, industrial lines, etc. Nowadays, ASIC microchip technology is widely applied everywhere, in many areas of life and production activities such as automatic machine processing systems, telecommunications …
In particular, with the vigorous development of cryptocurrencies in general and the prominence of Bitcoin, the application of ASIC chips has become a processor of mining machines in general and bitcoin miners in particular, known as ASIC miners for short. The big difference between ASIC miners from the CPUs (central processors) and GPUs (Graphics Processors) used to mine conventional coins is that they are only used for one thing: mining coins and will not be able to do anything else such as gaming or surfing the web, etc. Therefore, this ASIC miner works with the most optimal mining performance as all their resources will be concentrated to fulfill a need: mining coins.
Because of this difference, Vitalik Buterin, the founder of Ethereum, said that focusing on using ASIC miners is terrible for the cryptocurrency market when the number of coins may only focus on a specific part, leading to an imbalance in the market.
Currently, the largest ASIC mining company is Bitmain. Centralizing this production is a bad thing for a cryptocurrency network. At the time of writing, Bitmain’s two mines account for about 40% of the total computing capacity on the Bitcoin network. Controlling the majority of these Bitcoin networks means that Bitmain also significantly impacts the ecosystem.
The rise of ASIC miners on the network also gradually eliminates miners who use GPUs or CPUs, raising financial barriers to participating in mining and creating a centralization in mining.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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