An application-specific integrated circuit (ASIC) is a microchip designed to perform one task rather than many. In cryptocurrency, the term usually refers to an ASIC miner: a machine whose chips do nothing but compute a single hashing algorithm, such as the double SHA256 used by Bitcoin (BTC). Because every transistor is dedicated to that calculation, ASICs produce far more hashes per second and per unit of electricity than general-purpose processors or graphics cards.
ASICs are used widely outside crypto, in network routers, mobile phones and other electronics. In crypto mining they decide who can compete on major Proof of Work (PoW) networks. Coins designed to keep them out are described as ASIC resistant.
ASIC in plain terms
A Swiss Army knife can open a tin, cut string and tighten a screw, but a dedicated tin opener opens tins much faster. A general computer chip is the Swiss Army knife; an ASIC is the tin opener, built so that every part serves one job.
In mining, the job is endlessly repeating one kind of scrambling calculation to win the right to add the next page to a shared ledger. A machine that does nothing else can do it thousands of times faster than a laptop, for less electricity, which is why such machines took over from home computers.
How ASIC miners took over
Bitcoin was first mined on ordinary processors, then on the graphics processing unit (GPU), and briefly on programmable FPGA chips. The first commercially available Bitcoin ASIC, the Avalon, made by the Chinese company now known as Canaan, began shipping in January 2013. Within about a year ASICs had made CPU and GPU mining of Bitcoin pointless, and network hashrate and mining difficulty climbed by orders of magnitude.
The same pattern followed on other algorithms. ASICs for Scrypt, the algorithm used by Litecoin (LTC) and Dogecoin (DOGE), appeared in 2014. In April 2018 Bitmain confirmed it was selling an ASIC for Ethash, the algorithm then used by Ethereum (ETH), which had been designed to favour graphics cards.
Today a small number of firms design and sell most mining ASICs, notably Bitmain (the Antminer range), MicroBT (WhatsMiner) and Canaan (Avalon). The chips themselves are made by contract semiconductor foundries, so supply depends on the wider chip industry. New models are usually sold in batches months ahead of delivery, and prices for both new and used machines tend to rise and fall with the price of bitcoin.
Efficiency and economics
The key figure for an ASIC is energy efficiency, expressed as joules per terahash:
- is efficiency in joules per terahash (J/TH); lower is better.
- is the machine's power draw in watts (joules per second).
- is its hashrate in terahashes per second.
Worked example: a machine drawing 3,500 W while producing 200 TH/s has J/TH. A rival that draws the same power but produces 250 TH/s reaches 14 J/TH, so it earns about 25% more coins for the same electricity bill. Each new chip generation lowers this figure, which is why older machines become unprofitable as difficulty rises or the block reward falls at a halving.
ASICs are packaged as complete units with hashing boards, a control board, fans or liquid cooling and a power supply. They form the core of a modern Bitcoin mining rig, and nearly all owners point them at a mining pool.
Security effects and criticism
Supporters argue that ASICs strengthen Bitcoin. Because the machines are useless for anything else, their owners have a strong interest in the network's health; an attacker cannot simply borrow general computing power from cloud providers to mount a 51% attack. The capital sunk into specialised hardware is part of what makes rewriting history so expensive.
Critics raise several concerns:
- Concentration. A few manufacturers control supply and can, in principle, run new machines themselves before selling them, or favour certain buyers.
- Barriers to entry. Ordinary users cannot meaningfully mine with the computers they already own, which undercuts the early idea of mining as an open activity.
- Algorithm lock-in. Once billions of dollars of ASICs exist for an algorithm, changing it through a hard fork becomes politically very difficult.
- Electronic waste. Machines that cannot be repurposed are often scrapped after a few years.
These arguments led some projects, including Monero and Bitcoin Gold (BTG), to adopt algorithms intended to keep ASICs out, while Bitcoin's developers have kept SHA256 unchanged. Coins that share Bitcoin's algorithm, such as Bitcoin Cash (BCH), can be mined with the same machines, so hashpower moves between them as profitability shifts.