The cryptocurrency industry does not just offer profit to investors buying and trading assets. In fact, one can make a living by mining only cryptocurrencies. But each cryptocurrency is different in its mining process, with some being specifically designed for certain hardware. This is where ASIC resistance can become a factor. But what does ASIC resistance mean and what is it used for?
What is an ASIC?
If you’re not sure what an ASIC is, we’ll do a quick recap before we get to ASIC resistance.
An ASIC, or Application Specific Integrated Circuit, is a chip designed for a specific function. In this case, cryptocurrency mining, but ASICs are used elsewhere. While many cryptos could once be mined using a CPU or GPU, the growing competition and ever-shrinking supply of certain coins has given way to something a little more intense. Enter the ASIC.
As you can see from the picture above, ASIC miners don’t just consist of the circuit itself. To operate efficiently, ASIC miners also need a cooling fan and a backup generator. Each ASIC miner can only be used to mine one type of cryptocurrency. It wouldn’t be too much of a problem for those who mine various coins if ASIC miners were cheap, but, in reality, they are anything but. This is where ASIC-resistant cryptocurrencies can come in handy.
The problem with ASIC mining
There is no denying that ASIC miners are mining coins efficiently and successfully. But today, even the cheapest ASIC miners will cost you a few hundred dollars upfront, with some models costing thousands of dollars. Take Bitmain’s range, for example. It’s one of the most well-known and trusted retailers of ASIC miners, but it’s also representative of the huge spend on this type of hardware.
The cheapest Bitcoin miner available from Bitmain is the T19 Hydro. If you buy this model new, you face a bill of nearly $3,000. A number of other Bitmain miners are currently priced around $5,000, but we’re not talking about premium features yet. If you want one of Bitmain’s newer models, like the S19 Pro+, be prepared to shell out just over $15,000.
Sure, some people can afford that kind of gigantic down payment, but many of us just can’t imagine such an expense. Unfortunately, this is where the mining industry is skewed in favor of the wealthier miners. Bitcoin mining, for example, is only possible with an ASIC miner. While GPUs and CPUs could once be used, the dwindling unmined supply of Bitcoin and fierce competition among miners has made the whole process much more difficult.
This means that the average individual will now find it very difficult to get their foot in the door of the Bitcoin mining game. Not only are the upfront costs incredibly high, but the energy consumption of running an ASIC miner around the clock also results in an ever-increasing electricity bill. For this reason, many aspiring Bitcoin miners simply have to walk away from the business, leaving the mining rewards to those who can afford the expense.
But this struggle has not gone unnoticed, and this is where ASIC-resistant cryptocurrencies come in.
What is an ASIC-resistant cryptocurrency?
When it comes to cryptocurrency mining, three pieces of hardware can be used. Of course, you have your ASIC miner, then there are CPUs and GPUs. A CPU (central processing unit) is what you will find in your laptop or PC and is responsible for providing your device with operational instructions and processing power.
Additionally, you have GPUs (graphics processing units). You can also find them in your computer devices, which are responsible for rendering graphics. These pieces of hardware can be used to mine different cryptocurrencies, but have been somewhat overshadowed by ASIC miners in recent years. However, that hasn’t stopped some developers from making sure their cryptocurrencies are ASIC-resistant to level the playing field.
When a cryptocurrency is ASIC resistant, its protocol and mining algorithm are designed to be much less susceptible to ASIC mining. This is not to say that these cryptos are impossible to mine with ASICs. On the contrary, it’s just much more difficult and often a waste of time and money. For this reason, if an ASIC-equipped miner came across an ASIC-resistant cryptocurrency, they would likely be put off immediately. This is the main purpose of ASIC-resistant cryptocurrencies. They welcome those who use CPUs and GPUs.
5 Examples of ASIC Resistant Cryptocurrencies
Although many cryptocurrencies are not ASIC-resistant, there are many notable examples. So, let’s discuss the best ASIC resistant coins.
1. Ravencoin (RVN)
Ravencoin has become an incredibly popular mining option due to its ASIC resistance. Although Ravencoin is a product of a Bitcoin hard fork, its protocol was specifically modified to encourage CPU and GPU mining. Although GPU mining is generally faster and more efficient than CPU mining, opting for a CPU to start with can lower your costs. But if you’re happy to opt for a GPU, Nvidia and AMD models are popular choices for Ravencoin mining.
2. Monero (XMR)
Monero is another popular mining avenue for those looking to use more affordable hardware. Launched in 2014, this ASIC-resistant cryptocurrency can be mined with a CPU and a GPU. However, unlike Ravencoin, it is often more efficient to use a CPU to mine Monero due to the discrepancy between power consumption and profit. This differs depending on the hash rate of your chosen hardware, but it is important to note before choosing which CPU or GPU to buy for your Monero mining business.
3. Haven Protocol (XHV)
Haven Protocol is a proof-of-work cryptocurrency with a design inspired by Monero. And, like Monero, Haven Protocol is also ASIC-resistant, as its mining algorithm, RandomX, is specifically designed to suit CPUs and GPUs only. Haven Protocol is also a particularly profitable cryptocurrency to mine, with a current reward rate of around $1 per day.
4. Vertcoin (VTC)
Vertcoin’s Lyra2RE(v2) mining algorithm is ASIC resistant and therefore compatible with CPUs and GPUs. However, GPUs take the cake in this case. On top of that, a GPU rig is a much more viable choice than a single GPU in the Vertcoin mining process. This means that you may need to purchase a fair amount of additional hardware to mine Vertcoin, including a motherboard, processor, and mining hard drive.
5. Ethereum (ETH)
The most well-known ASIC-resistant cryptocurrency currently is Ethereum, a high-value decentralized asset. Ethereum can technically be mined with an ASIC platform but is not designed for such hardware, so you may find it difficult to make a profit if you use an ASIC in this case. Instead, Ethereum can be mined much more efficiently using a GPU. Many choose to build their own GPU rigs to mine Ethereum, which can be expensive but less than buying an ASIC miner.
ASIC-resistant cryptos open the door for novices and budget keepers
While cryptocurrency mining is often very successful using an ASIC miner, the high price of this hardware makes mining inaccessible to the average person. That’s why ASIC-resistant cryptocurrencies are a great option for those new to mining or just don’t want to invest too much money in the business.