Ever since Bitcoin burst onto the scene in 2009, the number of people mining for cryptocurrencies has increased exponentially. Both casual and serious crypto enthusiasts devote hours on end to mining Bitcoin and other currencies.
Of course, early on the mining craze, an application-specific integrated circuit, or what we know today as ASIC chips, did not exist. In order to mine, you had to use an old-fashioned Central Processing Unit (CPU), giving PC users with the more most advanced hardware an inherent advantage when it came to mining.
By 2010, Graphics Processing Units (GPUs) gave people the made it easier to go mining for Bitcoin, helping the cryptocurrency craze grow and make Bitcoin more of a household name. Soon enough, hobbyists were finding all kinds of ways to increase their hashing power and mining capabilities.
Things changed again around 2013 with the development of ASIC miners that blew GPUs away. Of course, crypto enthusiasts have always looked for ways to use top graphics cards to build mining rigs, which has been great news for GPU manufacturers like AMD and Nvidia in recent years.
Cryptocurrency Mining – In Plain English
To put it as simply as possible, mining occurs when cryptocurrency transactions are recorded and stored on blockchains, such as the Bitcoin Blockchain. Computers bundle together multiple Bitcoin transactions into a block. When that block reaches its maximum capacity of 1MB, it’s added to the Blockchain.
To accomplish this, either GPUs and ASIC miners are used to solve a Proof of Work cryptographic algorithm. If someone is able to solve the complicated algorithm, they receive a set number of Bitcoin. Currently, the reward is 12.5 BTC. Miners also earn a processing fee for the transactions that are stored on blocks. Naturally, higher transactions fees lead to miners processing the transaction faster.
GPUs vs ASIC miners – the war wages on
For the most part, miners who were fast to catch onto the growing trend have benefited the most. Early on, algorithms weren’t that tough to solve, and the rewards for doing so were substantial. However, with more miners getting on their computers and attempting to validate transactions in order to unblock blocks, the process has become far more difficult and complicated.
Over time, mining evolved from CPUs to GPUs and ultimately to ASIC chips. Today, all miners know that Bitcoin’s Proof of Work (PoW) algorithm is SHA256. While both GPU and ASIC miners are capable of processing the algorithm, ASIC chips have an inherent advantage.
Fortunately for GPU miners, they were thrown a lifeline in the form of altcoins like Ethereum, which has an algorithm that’s far more friendly to GPU chips. Thus, miners using PCs and GPUs can mine Ethereum without worrying about ASIC miners getting in the way and taking away potential profits.
In fact, due in part to Ethereum, GPUs saw such a comeback that there was a stock shortage in 2017. With the price of both Bitcoin and Ethereum on the rise, some retailers struggled to keep AMD cards in stock while companies like AMD and Nvidia did their best to keep up. Naturally, both AMD and Nvidia saw their stocks rise substantially, ending the year as the top chip manufacturers on the S&P 500.
Graphics Before Mining
Despite the great success Nvidia and AMD have achieved through GPUs, both companies insist their focus continues to be producing graphics cards designed for gaming. After all, the traditional purpose of GPUs is rendering graphics.
Of course, Nvidia had to admit that their growth and success was helped along by the boom in cryptocurrency mining. Eventually, Nvidia CEO Jensen Huang steered into the skid, acknowledging that cryptocurrencies, Blockchain, and crypto mining were here to stay.
AMD, meanwhile, stated in July 2017 that cryptocurrency mining wasn’t in the company’s long-term plans. However, in early 2018, CEO Lisa Su backtracked those comments, saying that AMD would be entering the Blockchain space.
GPUs Under Siege
Of course, companies like AMD and Nvidia that were once hesitant to enter the crypto arena must recognize that they are not the only game in town. There are many other companies working on hardware that is specifically designed for mining cryptocurrencies.
For instance, Bitmain, a Chinese hardware manufacturer, reported greater profits in 2017 than both AMD and Nvidia despite only manufacturing ASIC chips for a variety of cryptocurrencies. Many consider Bitmain’s Antminer S9 to be the most efficient Bitcoin miner the crypto world has ever known. Meanwhile, the company continues to expand, including the production of miners capable of solving different Proof of Work algorithms.
As a result, some in the cryptocurrency community have expressed concern about a potential monopoly on mining. When Bitmain launched the Antminer A3 Siacoin miner, some smaller cryptocurrencies gave consideration to hard forking their Blockchain. Monero actually went through with such a plan after Bitmain launched its Monero miner earlier this year.
It’s also pertinent to mention that even the Ethereum community had considered the merits of hard forking, doing so prior to Bitmain announcing its Ethash ASIC miner. Bitmain plans to release the Antminer E3 in July, and thus far, there’s no indication on how Ethereum plans to respond.
The bottom line is that the growth of ASIC miners made it inevitable for amateur miners to make significant headway. That being said, GPUs still make it possible for some miners to turn a profit. However, those with money to spend are always going to find a way to get the best hardware available, giving them an inherent advantage in the mining arena.