Since the birth of the first cryptocurrency more than ten years ago, many people have often expressed doubts about its legality, and some even regard virtual currency as a means of fraud. But in 2020, this concept has changed, and people realize that in the future Bitcoin (BTC) and other digital assets will play a key role in the global financial field.
This is not a far-fetched idea, because traditional financial practitioners who are cautious about cryptocurrencies now have enough confidence in the growth potential of cryptocurrencies. For example, JPMorgan and Goldman Sachs have changed their initial opposition to cryptocurrencies and become the latest group of companies to provide new financial services and products for the digital asset market.
As the growth potential and valuation of cryptocurrencies continue to increase, more and more people are optimistic about cryptocurrencies. The opportunities for participants in the entire crypto industry ecosystem to expand their income will also increase. Take Bitcoin as an example. In November last year, the price of Bitcoin increased by more than 60% to more than $18,000, while the income of miners soared by nearly 50% from the previous month. However, in a fiercely competitive environment, success is largely limited to a few industry leaders, and most participants are still difficult to reach.
For miners, obtaining advanced mining equipment (mining machines with high computing power, low power consumption, and short payback period) is still a key factor to ensure competitive advantage.
Technological innovation, continuous evolution
The mining industry has undergone a series of major changes before reaching today’s technological level. In the early days, only a computer could be used for mining. At that time, there was no complex and high-performance mining equipment, and Bitcoin could be obtained by using the CPU. Therefore, loose mining conditions have attracted many miners into the game, which has continuously promoted the rapid expansion of the Bitcoin network. However, the first generation of miners could not keep up with the pace of computing power, and they were eliminated in just one year.
GPUs were subsequently introduced to make mining more efficient and profitable for miners. At that time, combining multiple GPU mining became the norm, because miners tried to further improve the performance of mining equipment to maximize revenue. Although some progress has been made, the second-generation miners have not stood the test of time because their equipment not only consumes high energy, but also cannot run for a long time and lack long-term effectiveness.
In 2011, FPGA application became the development direction of next-generation mining equipment. Compared with CPU and GPU, FPGA is fast, low power consumption, better performance, and better heat dissipation than its predecessors. However, FPGA mining equipment was also very “short-lived” and was eventually replaced by ASIC, which is still the dominant technology in mining until today.
ASIC is specially designed for mining, and it is recognized by miners because of its outstanding performance in power consumption, computing power, and cost. Compared with the CPU used in 2009, the mining speed of ASIC is 50 million times that of CPU.
Striving forward
In fact, the mining industry has come a long way. In addition to performance-related developments, improvements have also been made to the technical environment, such as better energy efficiency ratios and faster computing power. Nowadays, with the increasing emphasis on sustainability, chip design providers will continue to innovate and provide better solutions to meet development needs.
I thought of two main areas of development. First of all, the existing mining equipment is modified to fundamentally reduce energy consumption. Secondly, reprogram the mining chips that you enjoy to allow the use of hybrid energy sources to obtain the best benefits.
Redesign the current mining equipment. Some concepts have already appeared on the market and are passing rigorous tests. One of them is the use of photonic chips for calculations. In theory, this technology is very promising to be applied. Compared with current electronic processors, the energy efficiency is improved by 2 to 3 orders of magnitude. In reality, especially with the expansion of Bitcoin mining scale, it is still uncertain whether energy saving can be achieved. Until then, ASICs and their ever-enhancing features will continue to dominate the mining field and lead the trend in mining energy efficiency.
Reprogram the existing mining chip. Contrary to popular perception, the mining industry is a relatively green industry. As of December 2019, Bitcoin is powered by more than 70% of renewable electricity. Although the benefits of using renewable energy are indisputable, in fact, renewable energy is an intermittent energy source that is not so reliable for Bitcoin miners with constant energy demand. On the contrary, fossil fuel-based energy is usually a more stable energy source. Therefore, in order to strike a balance between the sustainability of the industry and the scalability of the industry, a hybrid model can be adopted, in which renewable energy is the main energy source, and fossil fuels are used to generate electricity when production is short. This requires the current mining chip to be redesigned and reprogrammed to facilitate easy switching between the two different energy sources without interruption during the mining process.
As the status of cryptocurrencies continues to improve, new suppliers who want to get a share of the pie are constantly pouring in, and industry competition continues to increase. I think healthy competition has a positive effect because it can bring more innovation to the industry, thereby making the industry more efficient and more mature. At present, in order to take full advantage of the emerging cryptocurrency market growth, existing chip designers still need to conduct more in-depth technological research and development, especially in terms of energy optimization and energy efficiency ratio.
