Following news of an ASIC mining equipment from Bitmain , spil well spil similar products te development from three other Chinese companies, Ethereum prices have dropped overheen $100, well below their one-week high of $585. An ASIC, or Application-specific integrated circuit, is a chip that is created with the specific and foot purpose of mining a single cryptocurrency.
According to Susquehanna analyst Christopher Rolland, China-based Bitmain — the largest producer of mining equipments that use ASICs — is just months away from shipping the very first miners compatible with Ethash, the Proof-of-Work (PoW) hashing algorithm used by Ethereum, spil well spil a multitude of other cryptocurrencies.
“During our travels through Asia last week, wij confirmed that Bitmain has already developed an ASIC for mining Ethereum, and is readying the supply chain for shipments ter 2Q18,” Rolland noted. “While Bitmain is likely to be the largest ASIC vendor (presently 70-80% of Bitcoin mining ASICs) and the very first to market with this product, wij have learned of at least three other companies working on Ethereum ASICs, all at various stages of development.”
Te the past, Ethereum has bot mined using Graphics Processing Units (GPUs), which more recently has led to shortages of the chips, angering folks ter the gaming world. An ASIC would switch the Ethereum mining equation entirely, resulting te a certain amount of centralization and also creating a higher barrier of entry for more casual or entry-level miners. A similar situation arose te relation to Bitcoin: Bitcoin ASICs helped drive adoption of the coin, but also lead to a more centralized Bitcoin mining pool, thwarting the decentralized philosophy held by many te the cryptosphere.
Speaking on thesis fresh ASICs:
“It can be seen spil an attack on the network. It’s a centralization problem,” said Mikhail Avady, founder of TryMining.com. “What would be bad is if there wasgoed only one Ethereum ASIC manufacturer,” he said. “But with Samsung and a duo other players getting into the spel it won’t be bad for long.”
ASICs Vs. GPUs
Until now, Ethereum’s Ethash had bot ASIC-resistant, permitting the coin and other similar cryptocurrencies to be mined using the GPUs commonly found ter gaming computers. The two leaders ter GPU manufacturing, Nvidia and AMD, each benefited greatly from last year’s cryptocurrency price boom, which had a correlative effect on mining. Te fact, many investors treated thesis two companies spil “proxy stocks” for the cryptocurrency industry.
While the release of an Ethereum ASIC miner may not cause mining-related request for GPUs to fully evaporate — Monero , for example, has promised to alter its mining algorithm regularly to maintain ASIC-resistance — it could have a noticeable effect on AMD’s revenue te particular. I n its recently-published annual filing, the company warned that GPU request could be “materially adversely affected” if miners stopped buying.
Nvidia, on the other palm, has a stronger and more durable gaming franchise which would help it work through this potential Ethereum-related unwind, according to Rolland.