Application-specific integrated circuit (abbreviated as ASIC) is an  intergrated circuit (IC) customized for a particular use, rather than intended for general-purpose use. In Bitcoin mining hardware ,ASICs were the next step of development after CPUs, GPUs and FPGAs. Capable of easily outperforming the aforementioned platforms for Bitcoin mining in both speed and efficiency, all Bitcoin mining hardware that is practical in use will make use of one or more Bitcoin (SHA256d) ASICs.

Note that Bitcoin ASIC chips generally can only be used for Bitcoin mining. While there are rare exceptions – for example chips that mine both Bitcoin and scrypt – this is often because the chip package effectively has two ASICs: one for Bitcoin and one for scrypt.

The ASIC chip of choice determines, in large part, the cost and efficiency of a given miner, as ASIC development and manufacture are very expensive processes, and the ASIC chips themselves are often the components that require the most power on a Bitcoin miner.

While there are many Bitcoin mining hardware manufacturers, some of these should be seen as system integrators – using the ASIC chips manufactured by other parties, and combining them with other electronic components on a board to form the Bitcoin mining hardware.

What an ASIC miner actually does

In a nutshell, mining is the process of running complicated calculations in the search for a specific number. Mining hardware, whether it’s an ASIC miner or a GPU mining rig, has to run through many calculations before finding that number. In proof of work systems like Bitcoin, the first one to find that number gets a reward.

This combination of performance and low-power usage makes them much more economical to run than more general purpose hardware. That’s why in the case of Bitcoin and Litecoin, ASIC mining is just about the only way anyone mines those cryptocurrencies any more. However, ASICs many times lead to Centralization of the Network hashing power which in many scenarios can be potentially dangerous for a Cryptocurrency , letting its network vulnerable to threats like double spending or other attacks.

This is one of the reasons that many projects are trying to “ban” ASICs miner from their networks by implementing “ASIC Resistant” hashing algos for which ASICs are not effective. This way and by welcoming the GPU/CPU mining , the network’s hashing power is distributed much better around the world to more mining pools and to many more simple people who are able to participate in the process just with their PC hardware.

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