An Overview Of ASIC-Resistant

Application-specific Integrated Circuits (ASICs) are specialized integrated circuits purpose-built for specific tasks.

There are ASIC units built specifically for mining cryptocurrencies. In the early days of blockchain technology, miners most often used Graphics Processing Units (GPUs) for crypto mining. Today, dedicated ASICs are the norm.

However, there are blockchains that “resist” the use of such devices as a means to “level the playing field” for all network participants. These blockchains are known as “ASIC-resistant.” 

What’s ASIC Resistance?

ASIC resistance is a feature built into some blockchains that reduces, sometimes even eliminates, the benefits of using ASICs to mine on that chain.

In crypto mining (i.e., block validation through Proof-of-Work [PoW]), equipment such as GPUs and ASICs is tasked with executing hashing functions to find a specific number. The first miner to find this number is awarded the so-called block reward.

Bitcoin Total Hash Rate Compared to Market Price
Bitcoin Total Hash Rate Compared to Market Price | Source: Blockchain.com

Generating hashes in the enormous numbers necessary to arrive at the correct result takes time, and as more participants mine on the network, the difficulty grows.

ASICs are incredibly good at parallel processing hashing functions. Thus, they are perfectly suited to mining because they can generate many more hashes per second than GPUs.

For this reason, large-scale mining operations (i.e., mining farms) prefer to use ASICs. They’re also usually the only ones who can afford them as they tend to be prohibitively expensive for the average PC user.

Put together these factors significantly skew global crypto mining power in favor of large-scale miners, undermining decentralization — a core tenet of blockchain technology — in the process.

A Brief History Of ASIC Resistance

Before transitioning to Proof-of-Stake (PoS), Ethereum was the most popular ASIC-resistant blockchain network. With its Ethash algorithm, it created a particular challenge for ASIC developers because of the algorithm’s specific memory requirements. Put simply, this ASIC-resistant algorithm is known as a memory-hard, meaning it requires a lot of random access memory (RAM) to run.

However, even with this roadblock in place, the potential profit ASIC developers could capture if they developed mining equipment that could circumvent Ethash’s resistance was too great, and the necessary ASICs eventually arrived on the market. This is one of the reasons the network did a hard fork in 2022, adopting the PoS consensus model.

Notable ASIC-resistant blockchains include Litecoin, Monero, and Ethereum Classic (which still uses Ethhash). 

It’s worth noting that Bitcoin is not on the list of ASIC-resistant blockchains and its mining power has consolidated in the hands of a few major mining farms. Virtually all Bitcoin mining is done by ASICs at the time of writing. 

The Importance of ASIC Resistance and Its Role In Blockchain Mining

Interest in the topic of ASIC resistance has been growing in recent years. Events, such as a power outage in China which briefly decreased Bitcoin’s global hash rate by half, and centralized crypto exchange FTX’s collapse, have served to highlight the importance of decentralization. 

Fundamentally, ASIC resistance is centralization resistance. It’s implemented to give average blockchain users the power to mine with the same overall success rate as anyone else. It serves to make blockchain mining more egalitarian and decentralized. 

ASIC resistance is called that because it’s not a “set it and forget it” solution that completely protects miners from inequality. Rather, it’s a mechanism to reduce and resist the advantages of ASICs. As technology evolves, continuous effort is put into securing blockchains through ASIC resistance.

Conclusion

In conclusion, ASIC resistance plays an important role in decentralizing blockchain mining. This protects blockchains from monopolization and corruption and ensures they deliver on their intrinsic purpose of providing equal financial and data access across the world, to all.

Sources:

Doe, John, and Adam Smith. “ASIC-Resistant Proof of Work Based on Power Analysis of Low-End Microcontrollers.” ResearchGate, 2020. https://www.researchgate.net/publication/343620145_ASIC-Resistant_Proof_of_Work_Based_on_Power_Analysis_of_Low-End_Microcontrollers