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The Rise of ASIC Commoditization

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The Rise of ASIC Commoditization

Since the emergent of cryptocurrencies and, most especially, Bitcoin, the industry has gained tremendous growth and attention with a lot of scholars and experts holding that Bitcoin is the next big thing. The growth of cryptocurrency can be attested to the idea that it’s coordinated based on trust through the facilitation of transfers of value without relying on a centralized authority. Importantly, the most vital enabler to these developments is the so-called ‘proof-of-work mining,’ which adds new bitcoins to the money supply and thus protecting the network against nefarious participants attempting to use the same bitcoin more than once.

Notably, over the past few years, the machines responsible for maintaining the Bitcoin network have undergone rapid technological growth with more efficient and effective mining equipment being developed. One of these major developments is ASIC (application-specific integrated circuit). ASIC is an integrated circuit chip customized to run a highly-efficient bitcoin miner. In the world of cryptocurrency, an efficient/effective miming equipment is a quite fundamental feature of success as they are responsible for determining whether or not it is profitable for miners to do what they do; that is, process calculations required to embed blocks of transactions on the blockchain. Consequently, today ASIC has reached the commoditization level as cryptocurrencies are currently perceived to have an economic value, with some economies approving them as a form of trade. To this effect, below is a brief overview of ASIC commoditization and where its innovations could be heading next.

Firstly, Bitcoin mining began in 2009, not professionally but as a hobby. Satoshi Nakamoto, who is like the father of Bitcoin, mined his first Bitcoins using a normal computer. In roughly a year later, that is in 2010, the very first ASIC innovation was established with computations being executed with graphics processing units (GPU). Unlike the CPUs, the GPUs were optimized to perform a narrow range of computational tasks as they excelled in computing simple mathematical problems in parallel and thus generating thousands of time-sensitive image pixels. One of the features that made GPUs outstanding was the idea that they were able to compute mathematical operations such as those required in mining new Bitcoins. In 2011, the efforts of GPUs were quickly overshadowed by the development of FPGAs purposely to mine bitcoins. FPGAs were able to compute mathematical operations required in mining new bitcoins twice faster compared to GPUs; however, FPGAs were considered to be more labor-intensive to build as they required a special configuration of both the software and the hardware meaning that the device must be programmed to run customized codes.

The third innovation of Bitcoin mining and which is considered until today, the most significant development in the world of cryptocurrency, is ASIC. The development of ASIC required the largest amount of dedicated resources, time, and efforts to be successfully achieved. In 2013, a Chinese based company launched its first set of ASICs for Bitcoin mining, and unlike the CPUs, GPUs, and the FPGAs, ASICs were developed specifically to mine Bitcoin and not for any other purpose. Both ASICs software and hardware were designed and optimized to strictly compute necessary calculations to create new blocks of Bitcoins. Alongside the Chinese based company Canaan Creative, other companies have emerged, including MicroBT and Bitmain, with their main focus been to come up with new versions of ASIC mining devices with the most advanced hardware and software so as to enhance efficiency and effectiveness in mining new Bitcoins. Since the development of the very first ASIC Bitcoin mining devices, one of the highly notable development is the steady reduction in the chip size from the 130nm size in 2013 to the latest model of 7nm size.

Today the future of ASIC commoditization is quite apparent as there is a clear indication for a more competitive industry based on efficiency and not based on the size of the equipment and hardware as it used to be before. Research indicates that there is a promising future of a cryptocurrency industry whose competition will solely be based on technological advancement; nonetheless, it’s quite unclear what discoveries will be made in regards to the advancement of ASIC.

Collectively, one of the significant reasons behind the commoditization of ASIC is the idea that Bitcoins are offering an efficient means of transferring money over the internet while it’s being controlled by a decentralized network with a set of transparent set of rules. Additionally, this form of transparency has fostered ASIC to be commoditized as people are much willing to associate themselves with forms of transactions that are simple as well flexible. Similarly, experts are much convinced that Bitcoin could be the next big thing as a global digital monetary system since it has a lower than expected threshold to profitability, and for that, with this dampened volatility nature, it presents significant opportunities to unlock.

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