# What Is an ASIC Miner? How It Works and Why It Matters

## What Is an Application-Specific Integrated Circuit (ASIC) Miner?

An application-specific integrated circuit (ASIC) miner is specialized hardware for efficiently [mining](https://www.investopedia.com/tech/how-does-bitcoin-mining-work/) cryptocurrencies. ASIC miners work by solving cryptographic puzzles in a Proof of Work blockchain like Bitcoin. First introduced in 2012, ASICs have surpassed traditional CPU and GPU methods in speed and energy efficiency. Before investing in ASIC miners users should consider certain essentials, such as power consumption and location needs.

### Key Takeaways

*   ASIC miners are specialized devices designed specifically for cryptocurrency mining, offering significantly higher efficiency and speed compared to general-purpose computers.
*   Introduced in 2012, ASIC miners have become essential in cryptocurrency mining as they can solve cryptographic puzzles much faster, thus increasing the likelihood of earning mining rewards.
*   The development and use of ASIC miners have led to increased mining difficulty and competition, making it necessary for miners to consider joining pools to improve their chances of receiving rewards.
*   ASIC miners require consideration of factors like mining location, power consumption, and potential return on investment due to their high power consumption and heat generation.
*   Unlike CPUs, which perform a broad range of tasks, ASICs are optimized for one particular function, making them highly efficient in mining specific cryptocurrencies.

## Evolution and Impact of ASIC Miners

Cryptocurrency mining is required by a [proof of work](https://www.investopedia.com/terms/p/proof-work.asp) (PoW) blockchain like Bitcoin to carry out its operations. The mining process involves solving cryptographic puzzle by generating a hash until finding one with a value equal to or below the target difficulty number's value. The first miner to find the solution to the puzzle has their block added to the blockchain. Each winner in the bitcoin mining competition receives a reward (a specific amount of bitcoin) along with the transaction fees for the transactions in that block.  

In Bitcoin's early days, any computer with sufficient power could mine bitcoin. However, in 2012, the first ASIC miner was introduced, attracting many crypto miners.

As the network of mining machines grew, the mining difficulty increased because the network is designed to increase the difficulty when there is more computational power. This led to a race to achieve the most "hashing power," meaning how many hashes a miner or a networked mining rig can generate per second.

> **Fast Fact**
>
> The most powerful Bitcoin ASICs can hash at more than 400 terahashes per second (12 zeros). The latest GPUs, on the other hand, hash at about 120 megahashes per second (one million).

## Understanding the Functionality of ASIC Miners

Instead of being general-purpose integrated circuits—like RAM chips, PC processors, or mobile device microprocessors—ASICs employed in cryptocurrency mining are custom-designed to mine cryptocurrencies by only generating hashes. The chips are designed to compute one or a few hashing algorithms. They are placed on an integrated circuit board (or many) and programmed to generate hashes.

### Hashing

A hash is a long hexadecimal number, the result (output) of a hashing algorithm's input. Blocks have a dedicated space called a block header that includes certain information. One of these fields is the nonce, or "number used once." In another field, there is information about the transaction that will transfer the block reward to the miner, which is called the coinbase. The coinbase field also acts as an "extra nonce" field because it can hold more data. These two fields can be altered to generate different hashes.

To mine a block, the mining program changes the nonce and the extra nonce (usually both) to generate a new hash until a number less than the target hash is reached. This is called hashing. The more hashes that can be performed in a set period, the more likely a miner is to earn the reward.

> **Fast Fact**
>
> Bitcoin is programmed to allow a miner to hash at 8 x 1028 hashes per second—much more than the entire network of ASICs and other computers can currently do.

### Cooling

Hashing uses all of the computational resources in the ASIC miner, which generates a lot of heat. Heat generation inhibits efficiency. Heat slows down conductivity and can cause damage, so the machines use active cooling, such as heat sinks, large fans, or liquid cooling, to combat the heat. One ASIC mining farm, CleanSpark, submerges thousands of ASICs in non-conductive oil, which is cycled through a cooling process to maintain a specific temperature.  

> **Fast Fact**
>
> Many miners join a mining pool to increase their chances of earning bitcoin. Mining pools usually pay shares of rewards based on a miner's hashrate and work contributed.

## Key Factors to Consider Before Using ASIC Miners

Consider these factors before investing in an ASIC mining rig:

*   **Coins it can mine**: ASICs can mine fewer cryptocurrencies compared to GPU rigs. Cryptocurrencies that can be mined with ASICs include Bitcoin, Litecoin, and several others.
*   **Rig location**: While GPU rigs can be used at home without a problem, ASIC miners are louder and generate more heat. This means that one's home is not ideal for an ASIC miner, and alternate locations like a basement or garage with cooling need to be considered.
*   **Power consumption**: Newer ASICs are more energy-efficient than GPUs but still use a lot of power. An ASIC miner based in one's home may necessitate upgrading the electrical wiring system to handle the increased power load and additional cooling.
*   **Choosing a Bitcoin mining pool**: Mining pools enable miners to combine the power of their ASIC miner rigs to mine bitcoin and share the rewards for successfully minted blocks. Factors to be considered when choosing a pool include its reputation, size, and payment rules.
*   **Return on investment**: The return on investment may not be sufficiently high enough to justify the upfront cost of an ASIC miner and ongoing operating expenses.  
    

## What Is the Meaning of ASIC?

ASIC stands for Application-Specific Integrated Circuit. These special circuits can be designed for any purpose, but in cryptocurrency, they are built for mining.

## Is a CPU an ASIC?

No. ASICs are specific to one purpose, while a central processing unit is designed to be able to do much more than one or a few tasks.

## What Is ASIC in Electronics?

ASICs are printed electronic boards with circuits and processing units which act as a system that carries out specific tasks.

## The Bottom Line

ASIC miners are highly specialized devices designed specifically for cryptocurrency mining, which makes them far more efficient than traditional computing equipment like CPUs and GPUs. Introduced in 2012, they have dramatically increased mining efficiency and altered the cryptocurrency mining landscape. ASIC miners require significant initial investment and technical setup, so before investing, be sure to carefully consider costs, your potential return on investment, and the environmental impact related to power consumption and heat generation.  

> **Article Sources**
>
> 1.  O'Reilly. "[Mastering Bitcoin: Chapter 8. Mining and Consensus](https://www.oreilly.com/library/view/mastering-bitcoin/9781491902639/ch08.html)."
>     
> 2.  CleanSpark. "[CleanSpark, Inc Form 10-K, 2023](https://d18rn0p25nwr6d.cloudfront.net/CIK-0000827876/b748bcc6-c2bc-44b9-acb3-459c0b1d119b.pdf)," Page 7.