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WHY THIS MATTERS IN BRIEF

The more centralised the mining of an individual cryptocurrency becomes, especially if it leverages new, more powerful technology, the greater the impact on a cryptocurrencies value.

 

Rumors of a new ASIC mining  rig from Bitmain have driven Ethereum prices well below their one week high of $585. An ASIC, or Application Specific Integrated Circuit, in the cryptocurrency world is a chip that designers create for the specific purpose of mining a single currency. Early Bitcoin ASICs, for example, drove adoption up and then, in some eyes, centralised Bitcoin mining in a few hands, thereby thwarting the decentralised ethos of die hard cryptocurrency fans.

 

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According to a CNBC report, analyst Christopher Rolland visited China where he unearthed rumours of a new ASIC chip dedicated to Ethereum mining.

“During our travels through Asia last week, we confirmed that Bitmain has already developed an ASIC for mining Ethereum, and is readying the supply chain for shipments in 2Q18,” analyst Christopher Rolland wrote in a note to clients Monday, “while Bitmain is likely to be the largest ASIC vendor, with currently 70-80% of Bitcoin mining ASICs, and the first to market with this product, we have learned of at least three other companies working on Ethereum ASICs, all at various stages of development.”

Historically users have mined Ethereum using GPUs which, in turn, led to the unavailability of GPUs for gaming and graphics. However, an ASIC would change the mining equation entirely, resulting in a certain amount of centralisation as big players, including Bitmain, created higher barrier to entry for casual miners.

 

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“Ethereum is of the most profitable coins available for GPU mining,” said Mikhail Avady, founder of TryMining.com, “it’s going to affect a lot of the market. Without understanding the hash power of these Bitmain machines we can’t tell if it will make GPUs obsolete or not. It can be seen as an attack on the network. It’s a centralization problem.”

Avady points out that there is a constant debate among cryptocurrency aficionados regarding ASICs and their effect on the market. Some are expecting a move to more mineable coins including Monero and ZCash.

“What would be bad is if there was only one Ethereum ASIC manufacturer,” he said, “but with Samsung and a couple other players getting into the game it won’t be bad for long.”

 

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There is also concern over ICO launches and actual utility of Ethereum based smart contract tokens.

“The price of ETH is becoming consolidated as people become more realistic about blockchain technology,” said Sky Guo, CEO of Cypherium, “people are looking for higher quality blockchain projects. I believe a rebound in ETH’s price will come soon as panic surrounding regulations begins to fade.”

About author

Matthew Griffin

Matthew Griffin, award winning Futurist and Founder of the 311 Institute is described as "The Adviser behind the Advisers." Recognised for the past five years as one of the world's foremost futurists, innovation and strategy experts Matthew is an author, entrepreneur international speaker who helps investors, multi-nationals, regulators and sovereign governments around the world envision, build and lead the future. Today, asides from being a member of Centrica's prestigious Technology and Innovation Committee and mentoring XPrize teams, Matthew's accomplishments, among others, include playing the lead role in helping the world's largest smartphone manufacturers ideate the next five generations of mobile devices, and what comes beyond, and helping the world's largest high tech semiconductor manufacturers envision the next twenty years of intelligent machines. Matthew's clients include Accenture, Bain & Co, Bank of America, Blackrock, Bloomberg, Booz Allen Hamilton, Boston Consulting Group, Dell EMC, Dentons, Deloitte, Deutsche Bank, Du Pont, E&Y, Fidelity, Goldman Sachs, HPE, Huawei, JP Morgan Chase, KPMG, Lloyds Banking Group, McKinsey & Co, Monsanto, PWC, Qualcomm, Rolls Royce, SAP, Samsung, Schroeder's, Sequoia Capital, Sopra Steria, UBS, the UK's HM Treasury, the USAF and many others.

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