Bitcoin (BTC) has been taken over by ASIC mining leading to the concentration of hashing power in a couple of companies and pools. Other virtual currencies could suffer the same fate consequently opening their networks to dangerous centralization.
For a long time Ethereum (ETH) has resisted ASIC mining but now it looks inevitable since Bitmain, a maker of mining rigs, has announced that it will be launching an Ethereum ASIC miner in the next couple of months. The Bitmain system for mining Ethereum is understood to be around six times faster compared to Nvidia Geforce GTX 1080.
However this is not unexpected since one of the creators of Ethereum, Vitalik Buterin, had predicted that there was no algorithm used to manage mining rewards that was capable of remaining immune to ASICs indefinitely. According to Buterin, innovations would prevail despite the best efforts of developers to ensure that their code was optimized to be used with general-purpose computers.
To counter ASIC mining rigs the developers of Ethereum have been trying to build defenses in preparation for this and this has included the promotion of design choices which are aimed at protecting the blockchain from hardware meant to ensure mining rewards are consolidate in the hands of a few individuals with the means to operate at scale. These measures include radically reworking the software with a view to rendering ASIC hardware unusable.
Outside of Ethereum Siacoin (SC) and Monero (XMR) are making steps which are meant to ensure the software is changed in order to block Bitmain from growing its business there. There is no clear way forward for Ethereum though.
This is because the Ethereum community doubts that the mining chip developed by Bitmain will lead to any significant increases in performance. According to the community the increase in performance will not be so significant that it will lead to a widespread adoption of Bitmain?s hardware like it was the case with Bitcoin. Additionally the technical roadmap of Ethereum is also presenting challenges as the virtual currency is planning to move away from a proof-of-work system.
Ethereum?s mining algorithm ethash is different from that of Bitcoin because it is not geared towards hardware that is computationally intensive such as ASICs, it needs lots of memory. Thus regardless of where it is mined, be it a GPU or ASIC device, storage requirements will always be a factor. So far it is not clear whether the ASIC miner that Bitmain has developed for Ethereum has broken this basic aspect of ethash.
According to Nick Johnson, a developer, Bitmain?s ASIC hardware does not possess improvements which will guarantee a boost in performance that will threaten GPU cards that are already in use. Per Johnson what Bitmain has done is increase the amount of memory inside.
To fight off Bitmain and other large scale miners some have proposed that Ethereum undertakes a hard fork to prevent centralization and ensure that the virtual currency remains in the hands of hobbyists and individual miners.
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