Once upon a time, people could mine Bitcoin on their computers using their CPU. Back then the mining rewards were also significantly greater. The situation has changed significantly as soon as Bitcoin became more notorious and price started increasing. Nowadays, there is specialized Bitcoin mining equipment that can be expensive to acquire and operate. These specialized machines are called ASICs. But what are ASICs really, how do they work on a given blockchain and should you buy one to mine Bitcoin?
Common Misconceptions About Bitcoin Mining Hardware
To understand what ASICs are and how they operate, it is necessary to take care of some misconceptions about Bitcoin mining hardware:
- Technically, there is no such thing as Bitcoin mining hardware. There are ASICs designed for coins that use the SHA-256 mining algorithm.
- ASICs that can be used to mine for Bitcoin, can be used to mine for any SHA-256 coin.
- The high electricity costs associated with operating ASICs, make it profitable to use them only on bigger cap coins.
- Although there are many coins that are still being mined with GPUs that doesn’t mean they cannot be mined with ASICs.
- Bitcoin can still be mined with GPUs and even CPUs. The problem is that the hashing rate would make those tools mostly negligible within the network.
- There are ASIC resistant coins, but generally the resistance has always been breached once the coin’s market cap is big enough to attract more competitive mining.
Buying Bitcoin Mining Hardware
Once you understand these common misconceptions, you can go ahead with the issue of getting into mining or not. Bitcoin once was a network in which the mining threshold made it easier for anyone to profit from this core network activity. That is no longer the case, and buying an ASIC miner is a substantial commitment:
- They are not easy to operate because they are often loud. they consume a lot of electricity and they produce copious amounts of heat – unless you use water cooling, and that is a technical challenge in itself.
- ASICs require constant monitoring to make sure that they are hashing.
- There aren’t many suppliers – in fact, Bitmain is almost an ASIC monopoly in the space – which causes supply issues.
All these factors together with the price of Bitcoin, makes it extremely difficult to properly assess the risk of buying Bitcoin mining hardware. Nevertheless, if you live in a place with high electricity costs, then that disqualifies you from operating Bitcoin mining hardware in a profitable manner almost automatically.
Why you Shouldn’t Buy an ASIC Miner
If you are still considering buying Bitcoin an ASIC miner after taking all these factors into consideration, remember one thing: you should keep in mind that you cannot re-purpose an ASIC miner. This kind of hardware is only built for SHA-256 coins, which means that you cannot repurpose it. You will be able to point it to other coins, with the next most profitable after Bitcoin being Bitcoin Cash, but that might not be a suitable solution for you.
Maybe you Should Buy an ASIC Miner
There are still some people who buy and operate ASIC miners in their basements or in their garages. This might make sense in certain places close to the north or the south pole where winters are extremely cold, and electricity is cheap. The heat that comes from this kind of Bitcoin mining hardware can be used to heat a house or part of it during the winter, while it generates magical internet money. But then again, it might not be profitable – or bearable – for you to run your Bitcoin mining hardware in the summer.
Whichever way you choose to go, you now have the basic information you need to make the decision. In any case, you should check one of the Bitcoin mining calculators and research what are the conditions you are working with to run your ASIC miner. One thing is certain: Bitcoin mining is now too hard to be as distributed as it was at the beginning.