What exactly are we opposing against ASIC chip mining machines?

Chapter 0 Introduction

With Monero changing its mining algorithm to combat ASIC mining machines, and an Ethereum developer announcing at a conference that they were researching algorithms to combat ASIC mining machines, digital currencies have formed a huge anti-ASIC chip mining machine culture.

What is the logic behind these anti-ASIC chip professional mining machines?

Chapter 1 Why do we need to mine digital currencies?

Why do most digital currencies, represented by Bitcoin, require mining? Let’s look at the origin of digital currencies. In the Bitcoin white paper, Chapter 6 , the first paragraph:

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 amount of Bitcoin is 21 million, but it will not be fully 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.

There is no disagreement in the community about the miners' transaction packaging. There are only a few disputes, such as the occasional dispute over the empty blocks in the mining pool, which is not a big deal. Except for BTC/BCH/ETH/LTC, there are no transactions for other digital currencies to be packaged, so there is nothing to argue about.

Miners, or more accurately, mining pools, are autonomous. The third function of mining allows miners to have subjective choices about the direction of the digital currency system's protocol evolution. However, there is a great deal of disagreement in the digital currency ecosystem about whether miners should have the ability to deploy protocol upgrades.

The disagreement in the community over the direction of Bitcoin's protocol upgrade led to the split between BTC-Segwit and BCH. The two largest groups involved in this protracted dispute were developers and miners. Another earlier split of Ethereum, the split between ETH and ETC, also involved miners. Monero's algorithm change to fight against Bitmain's ASIC chip mining machine also led to the split.

Chapter 2 The Differences 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.

ASIC mining machines are better than GPU and CPU mining machines in every way, so why does the community form an anti-ASIC culture? They can't all be idiots, right?

Chapter 3 ASIC chip mining machines are not more centralized than graphics card mining machines

The most common argument against ASIC chip mining machines is centralization. Because Bitmain is too successful, many people dislike it. The hatred of the rich is a common cognitive bias.

There are four objective facts that must be accepted first. First, Bitmain has indeed produced the most Bitcoin (including BTC and BCH) mining machines, which has exceeded 50% of the total computing power . Second, BTC is indeed the most successful digital currency at present, and BCH, with more centralized mining machines, is far more successful than Monero and SC, which are trying to develop ASIC-resistant mining machines. Compared with Bitcoin, these coins that are clamoring to change their algorithms are all garbage , except for Ethereum, which is still quite successful.

There is also an economic necessity that resource-consuming manufacturing industries will inevitably concentrate towards efficient resource utilization. There are only a few well-known chip manufacturers in the world, and this is even more true for GPUs. Mining machine manufacturing is obviously more decentralized than GPU manufacturing.

There is also a common sense in economics that division of labor and cooperation can improve labor productivity and increase wealth production.

If we respect these four objective facts, we will inevitably come to a conclusion: an economic ecosystem of a high-quality digital currency designed based on POW consensus will inevitably produce professional miners, unless the currency is of inferior quality. Whether the birth of such professional miners is centralized is not right to measure from the number of miners, but should be measured from the purpose of decentralization. For more details, please refer to my article "EOS with 21 master nodes vs BTC with 20 mining pools vs BCH with 8 mining pools vs ETH with 25 mining pools, which one is more decentralized?"

It is not convincing to simply pin the blame on ASIC chips. So what are they fighting against?

Chapter 4 : Anti-ASIC is first and foremost about anti-miner protocol deployment power

Almost all coin developers hope to have control over the right to modify the code, and the founders of those coins are even more eager for this power. There are very few people who can disappear from the developer identity like Satoshi Nakamoto.

In the controversy over Bitcoin's Segregated Witness and on-chain expansion, developers were extremely annoyed by the fact that miners had the right to choose code, and tried every means to deprive miners of the ability to deploy code. During this period, they also invented a tool called User Activated Soft Fork (UASF) to force miners to commit. Among them, the Litecoin development team was the most straightforward. Litecoin founder Charlie Lee directly said that miners are gatekeepers and cannot refuse the orders of their masters.

The Bitcoin white paper does not define miners in this way, but clearly defines that miners have the right to decide on protocol deployment . Obviously, most project developers now do not want their development capabilities to be constrained by miners.

There are rarely conflicts between GPU miners and developers. For example, even if the developers of Ethereum want to reverse the transaction, because of The Dao incident, ETH developers led the hard fork to reverse the coins stolen by hackers, and the miners obeyed. GPU miners basically do not participate in protocol development.

I personally think that it is not good for Bitcoin if there is no check and balance on the power of developers. But I remain neutral on whether centralized coins should establish such a check and balance. The projects are all created by others, so what else do you want? It is good enough that they do not confiscate your coins. But if some coins claim to be decentralized and community-autonomous, but are anti-ASIC mining machines, I think they are wrong.

Chapter 5 : Anti-ASIC may be against the currency distribution system

Bitcoin uses mining as a mechanism for distributing coins, but what about other coins?

We know that the initial distribution of Ethereum depends on crowdfunding. The first batch of 72 million ETH was distributed to participants in Ethereum crowdfunding. This 72 million ETH is far more than half of the total. Currently, almost all new digital currency projects have crowdfunding, whether it is called angel investment or equity investment, but the coins are to be distributed to investors.

With the emergence of investors, it is natural to lean towards investors, and whether mining is set as a mechanism for distributing currency is not necessarily important. There are many mechanisms for distributing currency, such as Stellar using airdrops, various Bitcoin forks using a combination of pre-mining + airdrops + mining, and ICO coins naturally use a method of distribution based on investment amount.

These distribution systems are the freedom of each project team. I do not advocate that the Bitcoin mining distribution mechanism is the only correct way, although I think it is the fairest currency distribution mechanism so far.

Perhaps those who are against ASIC think that those who develop ASIC are capitalists, while those who engage in graphics card mining are geeks, and it is more politically correct to send coins to the latter.

Monero is very special. I checked the official website of Monero. Monero claims that there is no pre-mining, no stolen mining, no distribution of coins to developers, and no distribution of coins to investors, but they are also against ASIC. Maybe they think it is wrong to distribute coins to ASIC. Anyway, it is their project and they have the final say. As long as someone listens to them, it's fine.

Chapter 6 Conclusion

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.