In the early years of Bitcoin, mining was nothing more than a hobby for cryptocurrency enthusiasts. The only hardware required was a simple computer. Things have completely changed in less than 10 years.
On 2009, first Bitcoin miners used standard multi-core CPUs to produce BTC at a speed of 50 btc per block. Another key event in mining history occurred on October 2010: a community user released GPU mining bitcoins code to the public.
All this seems to be premature for Satoshi as can be understood from him sentence written in December 2009:
“We should have a gentleman’s agreement to postpone the GPU arms race as long as we can for the good of the network. It’s much easier to get new users up to speed if they don’t have to worry about GPU drivers and compatibility. It’s nice how anyone with just a CPU can compete fairly equally right now.”
With the increasing difficulties given by the GPU that increased the hashrate, the need for better and more dedicated hardware also increased.
Bitcoin mining with a single GPU required very little technical skill. Anyone with a minimum of computer skills and a few hundred euros could have done that, but the computational requirements were still low enough to make the GPU mining profitable. All this rapidly changed, as cryptocurrency started to become popular, miners began to study new ways to get more computing power to increase their profits.
The price of cryptocurrency along with mining difficulty continuing to grow, and with them, the hardware requirements necessary to earn enough made obsolete video cards to allow average users to make money. During June 2011, the devices (FPGA) took off, increasing the possibility of gaining miners.
The biggest advantage of this type of hardware was the lower energy consumption. It consumed a third of energy compared to GPUs to perform the same effectively task.
The development of FPGAs has soon started the engineering of ASIC systems, which have the best performance between computing power and energy consumption, this step marked the turning point between a hobby and a real industry in the mining sector.
Currently, it seems that mining sector is moving more and more towards the ASIC. Given the latest offers from manufacturers of dedicated hardware, working on new algorithms, the demand of GPU is decreasing resulting in a decline in prices compared to a couple of months ago.
For example, creating a new ASIC chip on the Equihash algorithm was perhaps one of the easiest targets for hardware manufacturers to achieve.
When a GPU works on the Equihash algorithm, the data must go to the off-chip memory, then go into the computational cores, manipulating the data and returning the results to the off-chip memory. Many algorithm developers don’t seem to realize that with ASIC it is possible to merge computational and memory components.
The situation is different when we talk about the Ethash algorithm (the one used for Ethereum). In this case, the creation of a dedicated ASIC for this algorithm is more complex. In fact, in this case GPU is still quite profitable as the performance of ASIC doesn’t far exceed those of a classic RIG video cards for ethereum.
Mining world is becoming more and more a real millionaire industry where only the big players can participate, making the possibilities of a centralized market high. The more money you invest, the greater is the benefit your company will have, there is no easy way to change this simple equation.
Since we can expect the largely centralized hashrate, we need to work on safe structures and patterns even when the hashrate is concentrated in a few places in the world.