Recently, there was a lot of talk about ASIC, Ethereum, video cards (GPU), AMD and Intel, all in the same breath and all in relations to Ethereum mining. What kicked this off was because Bitmain recently announced they will launch the AntMiner E3, sometime later this year, which is meant for mining on the Ethereum blockchain. This supposedly has caused dissatisfaction within the Ethereum mining community based on speculations of what the impact of introducing ASIC miners will be.
The majority of people who are not invested in either the mining process, hold ETH or any other digital currency that runs on the Ethereum blockchain, they might be asking themselves how this impacts them, and should they even care about it? Well, it is a good question! And unfortunately not one we can answer, but by giving you more information on the various subjects, you might just be able to do that yourself. Just for clarification, this will not be an in-depth technical article.
What is mining, and what is a miner?
First of all, mining only applies to blockchains that as part of its consensus protocol use Proof of Work (PoW) to create and validate a block. A blockchain that i.e. uses Proof of Stake (PoS) as part of its consensus protocol cannot be mined upon. There are other types of consensus protocols out there and even variations of the mentioned protocols ? we will not cover those in this article though.
In simple words, mining is the process of creating a block, its cryptographic hash value and show that you actually put some effort into creating the block ? hence Proof of Work. Very simplified put Proof of Work, or PoW, is done by creating a block?s cryptographic hash value which has to be less than the previous block?s cryptographic hash value. So a miner is a hardware which is used to calculate the cryptographic hash value. We will take a look at the hardware in the next part of this article.
Miners compete with each other to be the first one to create new blocks. This translates into the faster you can calculate the cryptographic hash value the more likely you are to be the first one to complete the task and receive the block reward, ?if any?, and the transaction fee. ?If any? is because currently miners will receive a block reward, but in the future, they will have to rely solely on transaction fees.
The block reward consist of a fixed amount of coins which is taken from a pool the creators reserved for use as an incentive to make it financially attractive to mine on their blockchain ? you may have heard people talk about block reward subsidy, which refers to this pool of coins. These coins were not released to the public but will be released through the block rewards ? hence the term mining. The block reward decrease in regular intervals set forth by the creator of the blockchain, until all the coins are released ? at which point the only financial incentive for mining will be the transaction fees.
But for now miners get a subsidized block reward, and we are talking big money here. At the time of writing this article, the ETH block reward was almost $1800 per block translating into the total block reward payout for the last 24hours was just over $10.6 million US dollars, according to bitinfocharts.com.
As mentioned earlier, computing power is everything when it comes to completing the task of generating a new block and be able to claim the block reward. While solo mining is possible it makes more sense to pool resources with other miners as it not only increases the total combined hash rate* but also increase your chances of claiming a part of the block reward. This is why you have a number of mining pools that are either run by a group of individuals or mining corporations.
*Hash rate is measured in X Hash per second, where X can be Mega, Giga, Tera and so on. I.e. Mega hash per second is written as MH/s.
The need for speed, literally speaking
So let?s look at the hardware part and the differences between a CPU (Central Processing Unit), GPU (Graphics Processing Unit) and ASIC (Application Specific Integrated Circuit).
The Ethereum blockchain probably has the best ratio of ?easy? to mine to profitability, which makes it attractive to mine at home on conventional off-the-shelf hardware such as a CPU or GPU.
Even though CPU?s today are both powerful and fast enough for computing complex cryptographic algorithms they are not necessarily ideal for the task.
The best way to describe why is to compare it to someone with attention deficit, on speed. I know this was not the nicest way, but my point is that it was designed as a multi-purpose-decision-making device that cannot focus and finish one task at the time ? and you wouldn?t want that either as it would mean you?d have to sit and wait for it to complete its current task before it would move on to the next.
Instead, it will be all over the place to keep all the processes running on your computer alive, which slows the hash rate down ? and again there is a sense of urgency involved if you want to have any hopes of being able to lay claim to a block reward.
With the GPU it gets better. GPU?s today are more broadly designed which allows them to accelerate certain computational workloads. Architecturally GPU?s have more cores than CPU?s which means that it has the potential of accelerating some software by 100x, and still be more power and cost efficient than a CPU. Though the GPU was not exclusively designed to calculate cryptographic hashes, it has the focus the CPU is lagging making it a better choice in achieving a higher hash rate.
This is why there has been a huge rush on video cards for quite some time. This has translated into the price on video cards has gone up in an effort to try and slow consumption for mining purposes, because it hurt availability to the ones that it was intended for, the video gaming community. The most ?tragic? part of this story is that both mining and video gaming popularity picked up at almost the same time, causing this huge rise in demand for video cards.
On the not off-the-shelf side, we find ASICs. An ASIC is a ?dumb? chip that has been designed to do, normally, one task only ? ?dumb? refers to it will not make any decisions; it will just do the task it was programmed to do, at an extremely high speed. ASIC has been used in enterprise-grade networking equipment such as routers, switches, and firewalls for decades, to move network packets around – fast.
When the ?Next Generation Firewall (NGFW)? was introduced Fortinet, a cybersecurity company, re-tasked their ASIC to do SSL decryption ? for those who don?t know, and the paranoid, it means that you can look into, most, encrypted packets and see exactly what they contain. The point of bringing this up is not to scare the paranoid, but to highlight the use case of ASIC to solve a cryptographic task at high speed.
The reason ASIC is not an off-the-shelf product is that it has a high R&D cost, and a very limited scope of use ? also it cannot be reprogrammed once fabricated. However, it is ideal for blockchain mining especially as the block creation difficulty increase over time, adding even more emphasis on a high hash rate speed. A lower hash rate speed will result in a slower block creation thus transactions will take longer to confirm.
One downside to ASIC is that it consumes more power than a CPU and even a GPU, which translates into it generates a lot of heat. What that means in words is the fan(s) will be extremely loud ? almost like a jet taking off give or take an engine. Besides the electricity bill, the noise is a big reason for why you do not want to have an AntMiner sitting in your living room. So unless you have a well sound insulated cold spare bedroom, and no wife to complain about your AntMiner needs its own room, and your in-laws have to sleep on the couch when they visit; then you might want to look into some alternative mining options. If anyone has gotten a divorce on this account, then we would very much like to hear from you and write your story!
That AMD and Intel have been mentioned is because they are the manufactures of the GPU?s used on the video cards used for mining, and of course gaming. The odd thing here is that no one has mentioned the video card manufacturers such as ASUS, Gigabyte, MSI, and others ? or for that matter the other component manufacturers for memory modules, power supplies and so on. Why this may matter to you we will look at next.
Video card industry
So even if you are not involved in cryptocurrency, be it mining or owning it, you may still be affected if you are an investor in any of the companies involved in the process of manufacturing the GPU?s and the video cards. The boom of demand for video cards, and their price skyrocketing means more earnings for those companies ? reports indicate that the cryptocurrency mining market was worth $776million in 2017. This number excludes the other component manufacturers, so the total is well beyond the reported number. When and if the demand for video cards normalizes these earnings will drop off and most likely be reflected in the respective companies share price.
Not going into the financials here, the key takes away is that mining was a new a marked that opened up and helped drive growth for the component industry as a whole. With this market going away they need to go back and continue to grow their regular markets ? or find a way to stay in the mining market.
The upside to this is that we might see the price on video cards go down unless the industry decides that the current price level is just fine and since the consumers are used to pay the premium there is no immediate reason to lower the prices. We just have to wait and see what happens.
Ethereum (mining) community
Finally, let?s take a look at the Ethereum (mining) community to try to understand why or what is causing dissatisfaction amongst the miners and its users.
An important thing to understand about the various cryptocurrencies, the founders, and their communities is that they tend to achieve an almost cult-like status. Their supporters are devoted to the coin and almost worship the person they see as the leader of a particular coin; Ethereum is no different in this way.
A good example of this is the Ethereum hard fork, which divided into Ethereum and Ethereum Classic and saw the community divide with the users rally around the leading figures. The reason for the hard fork of Ethereum was to restore coins that had been taken from its users, but it was never meant to split the community as it did, due to disagreement within the community. Could a yet another divide and a new Ethereum coin be on the horizon, based on the call-to-action the community is suggesting?
First and foremost it seems the community just wants to stop Bitmain?s ASIC rig from entering the mining scene ? though the real question here being is it the use of ASIC they oppose or Bitmain itself? That question can only be answered by the community, so it will remain unanswered in this article.
But let?s look at one of the suggestions, make alterations to the code to render the ASIC useless. Is this a feasible solution or even possible? From a feasibility point of view, it seems like a long shot and something that will turn into a cat and mouse game. Will it even be possible to make changes that will render the rig useless without knowing how it was put together? Remember the ASIC is ?dumb? it?ll just do what it is told to do, so if something else can interpret the change and translate that into a task the ASIC can do then this option is off the table. Keep in mind Ethereum is open source, Bitmain not so much ? so it kinda leaves Bitmain with the upper hand here.
Fact, Ethereum is working and testing on a hard fork. They have been working on a project named ?Casper? which will change consensus from PoW to PoS, and as mentioned at the beginning of the article PoS is not minable. Problem solved ? or is it? Well not being able to mine most definitely stops the Bitmain ASIC rig in its track right there ? along with the rest of the mining community one may add. This raises yet another question, does the community want to continue mine or are they happy about staking?
Whatever the answer may be to that question if the aim was to keep the entity Bitmain ?away? this won?t do that. Staking is the process of which you own the coin in which you want to stake, the more you own the higher your stake, read more of a trusted source you will become. On a side note, Bitmain?s profit for 2017 was somewhere between $3 to $4 billion USD, just saying.
Because there seem to be a divide around how or what to do and stop, will Ethereum end up in a D?j? vu situation with the upcoming hard fork?
Digging further around in this will not bring us closer to an answer. So let?s just conclude by saying that we may not have found an answer, but hopefully, you have a better picture of what is going on. I guess we just have to sit back and watch as the events unfold.
Disclaimer:?Nothing in this article should be construed as financial advice in any way, nor as an encouragement to engage in cryptocurrency mining activity. This article was not sponsored by any entities or companies mentioned in the article. The only purpose of this article is to inform/educate on the topics discussed in the article.
Dippli is an independent media outlet that covers the current events in the crypto space. Got breaking news or a story to share? Then feel free to contact us at firstname.lastname@example.org.
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Bybit to Cease Services for UK Citizens Following the FCA Ban on Crypto Derivatives Trading
The first consequences from the FCA ban on crypto derivatives trading in the UK are evident for the popular digital asset exchange Bybit. The company announced earlier that it will suspend its services to all customers based in the United Kingdom.
- Established in 2018, Bybit is a cryptocurrency exchange headquartered in Singapore with a reported user base of over one million registered clients. However, the firm will seize offering its services to UK-based customers, according to a recent press release.
- The statement informed that all UK users have to close all of their opened positions and withdraw all account balances by 8 AM UTC, March 31st, 2021. Following that date, UK citizens will be “restricted from accessing or performing any trading activities on Bybit.”
- Furthermore, the exchange will immediately restrict all new registrations using UK mobile numbers and/or IP addresses.
- Bybit’s decision is a direct consequence of a ban on crypto derivatives trading in the UK instituted by the country’s regulator – the Financial Conduct Authority (FCA).
- CryptoPotato reported last year that the watchdog planned to prohibit the sale, marketing, and distribution to all retail customers of crypto derivatives and exchange-traded notes (ETNs).
- At the time, the FCA described such products as “ill-suited for retail customers due to the harm they pose.” It also outlined that traders are unable to determine a reliable value because of the extreme volatility in the market and inadequate understanding.
- Interestingly, though, even the UK population couldn’t stop the FCA from implementing the ban as a survey compiled by the watchdog suggested that over 97% disagreed with the decision.
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PAID Crashes 70% In Minutes as Network Purportedly Exploited
PAID Network, one of the most popular Initial DEX Offerings (IDOs) that took place on Polkastarter’s platform a while ago and brought tremendous returns to private sale investors, is going through what seems as a massive attack.
- PAID Network, one of the most popular and heavily promoted IDOs that brought massive returns to private sale investors, seems to have been exploited.
- Multiple reports on social media point towards the exploit.
- It appears that over 59 million PAID tokens were minted and sold through Uniswap.
- This resulted in the price of the token taking a nosedive and decreasing by more than 80% in minutes.
- At the time of this writing, the team hasn’t come up with an official statement.
- Many in the cryptocurrency community speculate that this is a rug pull as the owner of the contract had the capability to mint new tokens.
$PAID got exploited, the person who minted the additional tokens still owns roughly 49M $ in tokens.
This is not a dip you want to buy.https://t.co/9gYLCGWaa9
— Bagsy (@imBagsy) March 5, 2021
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Bitcoin Losing the $50K Mark, Entering Bearish March: The Weekly Crypto Recap
This week was tough across the board, not just in the cryptocurrency market. It was marked by a serious correlation between Bitcoin and the S&P 500, as well as the entire legacy market, in general.
As CryptoPotato reported, the abovementioned correlation reached a 5-month high. While this seems to be bearish in the short term, given that the stock market slumped following government bond yield that gave the market a jolt, there’s also a bullish argument to be made.
Last weekend, the US House of Representatives passed President Biden’s $1.9 trillion COVID-19 Relief Package, which also got a 51-50 approval vote in the senate. Should the legislation become effective, it could be the case that markets will recover. Given the high correlation, this might also play out positively for Bitcoin and the cryptocurrency market as well.
Nevertheless, the week wasn’t favorable for the market as the primary cryptocurrency, as well as the majority of large-cap altcoins, remained indecisive and failed to regain the momentum they previously had. Presently, Bitcoin is trading at around $49,000. Historically, March has been one of the two most bearish months for Bitcoin, on par only with September. After all, we did see Bitcoin drop by 50% in 2 days last March upon the announcement of the coronavirus pandemic.
Elsewhere, major news took place all over. Binance Smart Chain saw its first major rug pull as Meerkat Finance saw its protocol drained of over $30 million in both Binance Coin and BUSD.
We saw developments in regard to the BitMEX – CFTC fiasco. In a recent filing, it was revealed that the former CEO of the derivatives exchange, Arthur Hayes, could surrender to US authorities in Hawaii this April.
On the more positive and funny side, Mark Cuban’s Dallas Mavericks announced that they would start accepting Dogecoin as a means of payment for tickets and merchandise. The billionaire celebrity gave the most earth-shattering explanation for the move, saying they did it “because we can.”
It’s certainly interesting to see how the global macroeconomic outlook will pan out in the coming days. Will the markets start to recover, or is there more pain ahead? Only time will tell.
Market Cap: $1,444B | 24H Vol: 130B | BTC Dominance: 60.7%
BTC: $48,959 (+2.94%) | ETH: $1,531 (+0.38%) | XRP: $0.462 (+3.89%)
Bitcoin Correlation With S&P 500 at 5-Month High: Is This Bearish for BTC? Data reveals that the correlation between the S&P 500 and Bitcoin’s price has hit a 5-month high. This was clearly confirmed over the past week as the cryptocurrency is following the traditional stock market very closely.
US House Passes $1.9 Trillion COVID-19 Relief Package, $1,400 Direct Check Provisions Included. The US House of Representatives has passed President Biden’s $1.9 trillion stimulus bill the past weekend. The Senate also voted 51-50 to proceed with the regulation. If successful, this will see another financial injection into the US economy.
First Major Rug Pull on Binance Smart Chain? Over $30 Million Drained. Meerkat Finance might have been the very first major rug pull on the novel Binance Smart Chain. The protocol saw over $30 million drained from it in what appears to be a rug pull. The community was taken ablaze as many people lost a lot of money.
Former BitMEX CEO Arthur Hayes Could Surrender in Hawaii in April. The former CEO of BitMEX and one of the most influential figures in the cryptocurrency industry, Arthur Hayes, could surrender to US authorities in April in Hawai. This became clear after new court documents were filed.
Mark Cuban’s Dallas Mavericks to Accept Dogecoin Payments. The Dallas Mavericks – an NBA team owned by famous billionaire and Shark Tank star Mark Cuban, will be accepting Dogecoin payments for tickets and merchandise. This became clear after a recent announcement where Cuban gave an astonishing reason for the move – “Because we can!.”
Tim Draper Handpicks Netflix as the Next Company to Purchase Bitcoin. According to one of the most popular venture capitalists in the cryptocurrency field, Tim Draper, the next major company to buy Bitcoin might be the streaming giant Netflix. He believes that the company’s co-CEO is the guy in control, and he thinks he’s an “innovative guy.”
This week we have a chart analysis of Bitcoin, Ethereum, Ripple, Polkadot, and Cardano – click here for the full price analysis.
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