Is the emergence of killer mining machines the result of fair competition?

Why do we need to mine digital currency?

Why do most digital currencies, represented by Bitcoin, require mining? Let’s look for the origin of digital currencies. Bitcoin White Paper, Chapter 6, Paragraph 1:

By convention, the first transaction in a block is a special transaction that starts a new coin owned by the creator of the block. This adds an incentive for nodes to support the network, and provides a way to initially distribute coins into circulation, since there is no central authority to issue them. The steady addition of a constant of amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended.

The first transaction in each block is specially processed, which generates a new electronic currency owned by the creator of the block. This increases the incentive for nodes to support the network and provides a way to distribute electronic currency into circulation without a centralized authority issuing currency. This method of continuously adding a certain amount of new currency to the monetary system is very similar to consuming resources to mine gold and inject gold into circulation. At this time, CPU time and power consumption are consumed resources.

This chapter makes it very clear that the essence of mining is "printing and distributing currency without a centralized authority." Mining is a fair process of distributing currency.

Miners mine for block rewards. Now, for almost all POW coins, the mining income other than blockchain rewards is negligible, except for BTC, which has transaction fees accounting for less than 10%.

The fiat currencies we use, such as the RMB, are constantly increasing, with new RMB being issued every day. But the question is, who are these new RMB given to first? Who can spend these newly printed RMB? This question is very complicated, and we can only simply say that the newly printed RMB belongs to the state power holders and those at the top of the financial institutions.

Bitcoin and most digital currencies are also inflated. The total number of Bitcoins is 21 million, but they will not be mined until 2140. Now an average of 1,800 coins are produced every day. Who owns all these newly produced coins? The answer is that they belong to the miners. Whoever mines the block owns it. Mining is a game of competition between miners. There is no administrative threshold for this game. As long as you are willing to spend resources and money, you can join in. So this is a decentralized currency distribution process.

Mining has two other main functions. The first is to package transactions , which is the process of helping digital currency users to keep and verify accounts. The second is to deploy protocol upgrades. When the digital currency system needs to be upgraded, miners need to upgrade their node software according to the new protocol. If miners do not upgrade the entire digital currency system, the upgrade cannot be successful.

The difference between ASIC chip mining and non-ASIC chip mining

ASIC chip professional mining machine refers to a mining machine made with specially customized hardware chips. It is very common in the manufacturing industry. A chip is designed specifically to achieve a specific function. ASIC chips are a very large industry and are not exclusive to digital currency mining. For example, when I designed a machine before, I customized a very simple algorithm chip and installed it in the machine.

ASIC chips are mainly used in the manufacturing industry to replace general-purpose chips when equipment is mass-produced. If general-purpose chips are to be used, they can be used to replace the CPU produced by Intel and the PLC produced by Siemens. Because specialized ASIC chips can achieve higher performance, lower energy consumption, smaller size, and can reduce costs in mass production. When any manufacturing product with a specific function moves towards large-scale mass production, ASIC chips will be introduced. No engineer would be stupid enough to use general-purpose chips to design mass-produced machines, unless you are designing a computer.

The ASIC chip miners in digital currency mining are mainly used to gain competitive advantages over graphics card miners and CPU miners. Graphics cards and CPUs are general-purpose chips, while ASIC chips are special-purpose chips. At the same price, the performance of ASIC miners is often hundreds to thousands of times that of graphics card and CPU miners. This advantage is an order of magnitude. The direct result is that the unit energy consumption of digital currencies using ASIC miners is better for the network.

In a network with the same computing power, using ASIC mining machines is obviously lower cost and more environmentally friendly, and is unimaginably lower than GPU mining machines. However, ASIC mining often leads to an exponential increase in the computing power of the entire network, and the energy and manufacturing costs consumed to support the network will also be higher than GPU mining machines.

Because ASIC chips are specially customized, the mining machine is tied to the interests of the corresponding currency. If the currency is no longer useful, the mining machine will be scrapped, and the only thing that can be recycled is the heat sink. Graphics cards and CPUs are universal, and you can use them to mine any currency you want. If they die, you can switch to another one. If they really don't work, you can sell second-hand graphics cards to get back some of the residual value. So the result is that miners using ASIC chip mining machines are more loyal to the coins they mine.

In summary, the essential differences between ASIC mining machines and graphics card CPU mining machines are, first, the difference between special-purpose and general-purpose ; second, the difference between high efficiency and inefficiency .

Bitcoin mining is a mechanism that does not rely on a central institution to distribute currency. This is currently the fairest currency distribution mechanism, and the emergence of ASICs is the result of fair competition.

Starting from a very original expertise, using it, training it, nurturing it, watching it grow little by little, not deviating from it, but also not letting it stand still. This is the underlying code for the success of many innovative companies like Bitmain.