This post was made by guest author, Eduardo Prospero
At the intersection of energy and money, the ASICs that power the bitcoin network serve as the connecting point. Let’s unveil the mystery around these enigmatic machines that came out of nowhere to dominate the bitcoin mining industry.
What Are ASICs?
ASIC is an acronym for Application-Specific Integrated Circuits and that means that ASICs do one thing and one thing only: They mine bitcoin at the highest speed possible, using the least amount of electricity.
Specifically, ASICs produce hashes. That means that, through trial and error, the machines try to find the winning nonce to complete the math equation. In 2009, when Satoshi Nakamoto deployed the bitcoin network, home-grade CPUs were enough to participate in the bitcoin mining process. As the network grew, so did the competition. The miners moved to the much faster GPUs or Graphic Processing Units, and then to Field Programmable Gate Arrays or FPGAs. However, by the end of 2013, ASICs came into the picture and obsoleted everything in their path. And thus, the bitcoin mining industry as we know it arose.
Bitcoin mining connects the best money ever invented with the real world. You can’t fake energy consumption, and that’s one of the reasons that the Proof-Of-Work consensus mechanism is absolutely essential to the bitcoin network. And ASICs are currently at the mere center of the process. Let’s find out more about them.
ASIC Systems In The General Sense
The bitcoin mining ASICs are just the latest iteration of an ever-evolving technology. The story of integrated circuits began in the early sixties, but back then manufacturers produced them to perform a wide variety of tasks. In other words, the first Integrated Circuits weren’t Application-Specific. That changed in the eighties when technology and chips evolved and engineers figured out that customizing them for a specific task could significantly enhance their performance, make them cost-effective, and even lower their electricity consumption.
That breakthrough came at a cost, however. These modern-day ASICs require a long and expensive development process. Plus, since they only do one thing, the risk of obsolescence is even higher than in more versatile technological products. Nevertheless, ASICs are everywhere from digital voice recorders to video codecs, airbag systems, hearing aids, pacemakers, and memory blocks like RAM or flash memories.
This article, however, is about the new kids on the block.
Bitcoin Mining-Specific ASICs
If we zoom in on bitcoin’s present, the main consumers of ASICs are large and well-funded corporations rather than home miners and small operations. And the machines themselves have evolved into high-power workhorses. The last cycle’s protagonists were the Antminer S19 XP by Bitmain, which produces 141 TH/s, and the 120TH/s Whatsminer M50 by MicroBT, which reportedly is more resistant to extreme climate conditions. And apparently, both companies have new and more powerful prototypes ready for market.
While assessing new equipment, the three things ASIC buyers have to take into account are local energy cost, the energy efficiency of the machine, and its initial price of acquisition. The new models will surely break efficiency records, but at what cost? In places with cheap energy, it’s still profitable to run old ASIC models. An extraordinary amount of classic Antminer S9s are still working in many parts of the world. This fact has created a dynamic secondary market in which older and/or refurbished machines get a second chance.
What’s The Deal With Block And ASICs?
The problem Jack Dorsey’s Block is trying to solve is one of bitcoin’s weak spots, the “high level of centralization of the supply of bitcoin mining ASICs.” And Block might be the company to do it, because according to this report, it has “longstanding ASIC design experience, having made ASICs for our Square point of sale solutions for years.” Besides chips, they plan to create hardware parts like a hashboard and a controller board. Plus, open-source software and a Mining Development Kit for developers to use as they please.
In the quoted report, Block elaborates on the characteristics of its ASICs program:
“We plan to make our bitcoin mining technology open source where we can. In other words, we intend to make it possible for third parties to use our hardware and software solutions for their own further development, by selling standalone ASICs and hardware components, and providing extensive support and reference resources.”
The program is currently in development and no one outside of the company has seen any of the prototypes. Nevertheless, the whole endeavor seems promising. Let’s further connect the Block story with the Intel story.
What’s The Deal With Semiconductors?
Currently, there are three big semiconductor foundries: Samsung, SMIC, and TSMC. All of them are in South Korea. In bitcoin mining, the foundry prints the design right into the silicon chip. To understand the process, let’s quote Block’s report once again:
“Semiconductor manufacturing is an expensive endeavor, requiring large investments first in design, then in the masks used to imprint the design onto silicon wafers, and finally in the production and packaging of the chips. Once a design is complete, it is sent to the foundry (or “taped out”) for manufacturing of the masks.”
Present-day top-of-the-line ASICs use a five-nanometer semiconductor. The Block team was developing those, but Intel folded their whole chip manufacturing program, which presented “an opportunity to acquire a large volume of bitcoin mining ASICs from Intel, and just completed a purchase agreement with Intel.” That opened the door for Block’s researchers and design team to focus “on cutting edge three nanometer ASIC development.”
Nevertheless, the big developments in this next cycle might not happen in that area.
ASIC Cooling Systems Are Heating Up
Because of the law of diminishing returns, every day that goes by, breakthroughs in energy efficiency get more expensive and harder to accomplish. However, innovation doesn’t stop and cooling systems are the hot topic for the next generation of ASICs. Traditionally, natural cold weather and air-cooling systems with noisy fans were the main way to keep those machines from going up in flames.
Let’s take a look at the techniques that will probably dominate the next cycle.
Immersion Mining
You’ve probably seen it before, but immersion cooling systems are going mainstream. The practice involves submerging ASICs in non-conductive liquids or coolants, also known as dielectric fluids. The direct contact between the machines and the liquid constrains the heat and gives the miners the power to reuse it in many other ways. Immersion also significantly reduces noise. Plus, these machines don’t need a cooling fan. The removal immediately improves the ASIC’s energy efficiency.
Word on the street is that mining giants Argo and Riot are building massive immersion cooling facilities. As you probably figured out already, the process requires heavy investing upfront. However, in a thorough study on the subject, mining experts at Braiins concluded:
“Although the price tag of immersion seems extremely high for many miners, it is relatively insignificant compared to the cost of new-gen ASIC hardware. If you don’t have easy access to capital, or you are building a smaller-scale operation and using older, less efficient mining machines, then immersion likely won’t make sense. But for well-capitalized miners building industrial-scale operations, particularly in places with hot summers like Texas and the rest of the southern US, then immersion is probably worth it.”
Hydro-Cooled Mining
This brave new cooling technique also significantly reduces noise and gives miners the possibility of reusing the heat that the ASICs produce in many other ways. Those two characteristics seem to be crucial for mining equipment in this next cycle. For a description of this novel process, let’s quote the Luxor mining team and their HashrateIndex:
“Hydro cooling also known as liquid cooling, utilizes cold plate water cooling technology which uses deionized water as the heat transfer medium. Unlike immersion cooling, hydro cooling typically uses a closed-loop system in which water is circulated through heat exchangers without coming into contact with the electrical components.”
That’s right, hydro-cooling just uses deionized water instead of fancy dielectric fluids. The caveat here is that the ASIC itself has to be built with hydro-cooling in mind. The soon-to-be-released Whatsminer M53 and M33 are MicroBT’s bet on this technique.
Custom Firmware
Traditionally, bitcoin miners use the software included with the ASICs. Besides possible backdoor risks, these programs provide limited customization. With that in mind, the two companies that we quote, Luxor and Braiins, have developed their own custom firmware. That is another way to optimize ASIC performance without relying on new-generation chips.
FAQ About ASICs
Q: What is ASIC bitcoin mining?
A: To participate in the bitcoin mining process using ASICs, which are machines specifically designed to do that and only that.
Q: What does the ASIC acronym stand for?
A: It means Application-Specific Integrated Circuits.
Q: Are ASICs a new phenomenon?
A; No, integrated circuits have existed since the early sixties. Nevertheless, back then manufacturers produced them to perform a wide variety of tasks.
Q: Can you mine bitcoin with an ASIC?
A: Yes, an ASIC made to mine bitcoin can only mine bitcoin. However, there is an assortment of Application-Specific Integrated Circuits that are manufactured to perform other tasks.
Q: What can ASICs do besides mining bitcoin?
A: By definition, an Application-Specific Integrated Circuit performs only one task. There are ASICs in digital voice recorders, video codecs, airbag systems, hearing aids, pacemakers, and memory blocks like RAM or flash memories.
Q: Can I mine Bitcoin without an ASIC?
A: Yes, technically you can. You won’t be competitive and your chances of getting the block subsidy are extremely low, though.
Q: In the past, did the Bitcoin network use other machines to mine?
A: Yes, at first home-grade CPUs powered bitcoin mining. After a while, miners moved to the much faster GPUs or Graphic Processing Units, and then to Field Programmable Gate Arrays or FPGAs. Nowadays, miners need ASICs to compete.
Q: When considering buying new equipment, what does a miner have to asses?
A: The three main points are local energy cost, the energy efficiency of the machine, and its initial price of acquisition.
Q: What air-cooling systems do ASICs use?
A: Traditionally, they used natural weather and fans. Nowadays, the big ASIC companies are betting on Immersion mining and hydro-cooled systems.
Q: What is an “immersion cooling system” in bitcoin mining?
A: The practice involves submerging ASICs in non-conductive liquids or coolants, also known as dielectric fluids. The direct contact between the machines and the liquid constrains the heat and gives the miners the power to reuse it in many other ways.
Q: What is a “hydro-cooled system” in bitcoin mining?
A: For a definition, let’s quote the Luxor Mining team: “Hydro cooling also known as liquid cooling, utilizes cold plate water cooling technology which uses deionized water as the heat transfer medium. Unlike immersion cooling, hydro cooling typically uses a closed-loop system in which water is circulated through heat exchangers without coming into contact with the electrical components.”
Q: How can custom software optimize ASIC performance?
The firmware that controls new ASICs comes from the manufacturers. It carries backdoor risk and offers limited customization. Using custom firmware could help miners to unleash their ASICs’ full capabilities.