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The ASIC Chronicles: The Historical Timeline of Bitcoin's Mining Revolution

by Alyze Sam, #WomenInBlockchainJanuary 8th, 2024

Too Long; Didn't Read

Inquiring minds frequently reach out to us about financial technologies; many “normies” ask if HODLing Bitcoin and BTC mining are still profitable, and, as always, they demand we predict the industry's future. Well, digital assets and the mining instruments that have upheld blockchain protocols swiftly evolved as Bitcoin’s user base broadened. Let's explore the evolution of Bitcoin mining for a better glimpse of the digital economic landscape and profitability in mining.

featured image - The ASIC Chronicles:
The Historical Timeline of Bitcoin's Mining Revolution

First, what is Bitcoin Mining?

Bitcoin mining creates new Bitcoin as transactions are verified and added to the blockchain. Miners currently use ASICs to solve complex mathematical problems to approve network exchanges; a new block is added to Bitcoin's ledger when transactions are verified, leaving an immutable and digital ledger. Miners gain freshly minted Bitcoin and transaction fees for their computational efforts and energy. This process ensures the integrity of the network and maintains its decentralized structure.

If that's hard to follow, consider Bitcoin mining like a digital gold rush. Miners use computers to confirm and record all the transactions people make with Bitcoin. Miners are like bankers; they ensure transactions are accurate. Like banks, miners can't work for free. The winning miner is rewarded with new Bitcoins when a transaction is verified. It's akin to discovering gold while working at a bank.

Since its inception, the machines responsible for carrying the Bitcoin network have rapidly become more powerful and sophisticated. Mining is critical to Bitcoin’s network. It permits mining profitability and facilitates the processing of transactions onto the blockchain.

Although often overlooked, mining equipment was crucial to turning crypto into a multi-billion dollar industry. Despite ongoing development, indications suggest a potential slowdown.

The CPU Era

On January 3, 2009, the enigmatic figure Satoshi Nakamoto mined the inaugural Bitcoin block. As the network's sole miner, Nakamoto didn't need specialized equipment to get the ball rolling. An ordinary CPU sufficed back then.

The computers commonly used for internet browsing, running applications like Microsoft Word, and other mundane tasks have what's called a central processing unit (CPU). This component is how commands are processed and executed on a computer.

Due to the dearth of competition in the early days, the computational power needed to generate new blocks and gain mining rewards could be found on your home computer.

But as more miners joined the Bitcoin network to vie for the budding cryptocurrency, an arm’s race began to take shape.

GPU and FPGA Mining

Mining hardware rapidly expanded after Bitcoin gained a respectable market value. In a historic move on May 22, 2010, Laszlo Hanyecz, a computer whiz, bought two Papa John’s pizzas for 10,000 BTC, worth about $25. According to Coin Metrics, Bitcoin's price rocketed to 8 cents by July, and by October that year, hitting 10 cents, saw the birth of the first mining device using graphics processing units (GPUs).

GPUs, unlike CPUs, specialize in specific computational tasks. Initially made for gaming, they parallel process simple math tasks, simultaneously churning out thousands of image pixels. They can tackle the math required for mining new BTC with a tweak.

GPU mining turbocharged Bitcoin block production, making it roughly six times more efficient on average, according to Josh Metnick, CEO of mining gurus Navier. Even though GPUs cost just twice as much as average CPUs, they scored big on efficiency.

But the glory days were fleeting. Enter 2011, when field programmable gate arrays (FPGAs) were given a makeover for Bitcoin mining. Metnick’s numbers show FPGAs solve the mining equations needed twice as fast as top-notch GPUs.

However, building FPGAs is a more demanding gig. You must fine-tune software and hardware, programming them for custom code execution and perfecting their setup for top-notch performance. This adaptability makes FPGAs a hotshot for Bitcoin mining compared to GPUs.

ASICs

ASIC mining marked a pivotal shift, demanding extensive resources and time for its development. Unlike previous adaptations, this innovation focused on creating dedicated machines to be used solely for mining Bitcoin. Canaan Creative, a China-based hardware manufacturer, made waves in 2013 by releasing the first application-specific integrated circuits (ASICs) tailored specifically for this enterprise.

Unlike CPUs, GPUs, or FPGAs, these ASICs were purpose-built from scratch for Bitcoin mining. All their hardware and software components were meticulously designed and optimized solely for the precise calculations required to create new Bitcoin blocks. The efficiency gains achieved by ASICs surpassed all previous general-purpose devices.

While Canaan Creative led the charge, other manufacturers like Bitmain and MicroBT joined in, releasing increasingly advanced ASICs. One notable development since 2013 has been the consistent reduction in chip size, from an initial 130nm down to 7nm in the latest models.

The importance of chip size ties directly to mining efficiency. Larger ASIC chips require more electricity for data transmission due to wider communication channels. Per Metnick's calculations, today's ASIC Bitcoin mining devices operate a staggering 100 billion times faster than the average CPU in 2009.

Experts say Bitcoin’s skyrocketing dollar value is a driving force behind the mining hardware explosion. The escalating market value of block rewards incentivizes innovations in mining technology, aiming to elevate miner profit margins while reducing operational costs.

Is Bitcoin Mining Still Yielding Millions!?

Since 2015, the reduction in chip size for ASIC Bitcoin mining devices has been less dramatic compared to earlier years like 2013 and 2014.

Furthermore, there has yet to be a breakthrough technology comparable to GPU or FPGA mining that significantly boosts mining efficiency after the initial Bitcoin ASIC miner.

Many commercial operations suggest we're approaching fundamental limits in Bitcoin mining and across the semiconductor industry. There’s a call to action for a “revolutionary new device” to propel progress.

Such game-changing tech is necessary for miners to shift their focus away from the hardware competition that's defined the past decade. If mining hardware becomes standardized, miners must seek other avenues for a competitive edge— energy sourcing, financial strategies, or product diversification.

While hardware advancements historically drove efficiency gains, this trend might taper off with fewer significant innovations. Competition will continue, clamoring for an upgrade, but what will the next leap entail?

2024 & the Future of Bitcoin Mining

Bitcoin's impending halving has miners anticipating potential impacts from reduced $BTC mining yields.

Price and trader sentiments will shape how the highly-awaited halving affects miners in the future.\

Prominent players stress the necessity of efficiency to sustain profitability post-2024's halving. Bitcoin's protocol diminishes the BTC given to miners with each additional block.

The upcoming halving, the fourth event of its kind, will slash the Bitcoin mining reward from 6.25 BTC to 3.125 BTC. Previous halvings occurred in 2012, 2016, and 2020 or approximately every four years, with a block added every ten minutes, marking a reduction after every 210,000 blocks.

The reduction in mining rewards holds significant weight for miners, impacting profitability, returns on hardware investments, and operational expenses, so we all ask, now you know the history, what is the future of Bitcoin mining?

Authored By Alyze Sam

Alyze Sam is a refreshing blockchain strategist, a novel educator, a multi-award-winning author, a serial co-founder, and a vehemently driven advocate. She is launching Web3 solutions as the CEO of a fair launch incubator. Sam has notably published books with Don Tapscott and Alex Tapscott and wrote a tech encyclopedia with inventors of the tech, Eric Pulier, Craig Sellars, Reeve Collins, J.R. Willett, and many other Thought Leaders. The Bad Crypto Podcast developed a Blockchain Hero NFT inspired by her work: Mz. Stability. Sam has been ranked top 50 in Blockchain, Top 100 in Web3, and top 5 Women in NFTs (HackerNoon, 2022) and released The ABCs of NFTs with the world's youngest author, her 4-year-old son!

Edited By Adam Alonzi

Alonzi is a biotechnologist, documentary maker, programmer, and author. His scientific interests include gene therapy and neuroscience, the latter culminating in a publication in The Routledge Handbook of Consciousness in 2017. He is also an analyst for the Millennium Project and Head of New Media for BioViva Science.

Sam & Alonzi have six published books that have been awarded best sellers and best releases in over 14 science, business, education, and technical categories. Order their latest #1 new release with Alex Tapscott on Amazon now: Digital Asset Revolution and her #1 in Computer Science & Financial Education: Stablecoin Evolution & the Nifty Encyclopedia AR interactive NFT and coffee table collectors edition is out for pre-sale now