ASIC Arms Race Continues Unabated with No End in Sight

The
depreciation
challenges
faced
by
ASIC
owners
show
no
signs
of
abating
as
technological
advancements
in
mining
equipment
persist,
according
to
CoinShares.
Despite
assurances
in
recent
years
that
ASIC
efficiency
improvements
were
nearing
their
limits,
the
market
continues
to
see
significant
advancements,
leading
to
rapid
obsolescence
of
existing
machinery.

Technological
Advancements
in
ASICs

Since
2018,
the
efficiency
of
leading
mining
machines
has
improved
dramatically.
For
instance,
the
newly
announced
S21XP
hydro
model
from
Bitmain
boasts
an
efficiency
of
13
J/TH,
a
seven-fold
improvement
over
prior
models.
This
ongoing
innovation
has
resulted
in
a
continued
increase
in
hashrate,
with
the
trend
showing
minimal
signs
of
slowing
down.

Bitcoin’s
mining
difficulty,
a
protocol-dependent
variable
cost
function,
ensures
that
the
emission
schedule
remains
on
target
regardless
of
hashrate.
However,
this
also
means
that
new,
more
powerful
mining
machines
rapidly
depreciate
the
value
of
existing
ones,
presenting
a
significant
challenge
for
miners
seeking
a
return
on
investment
(ROI).

Limitations
of
Moore’s
Law

The
anticipation
of
the
end
of
Moore’s
Law
is
driven
by
the
physical
limits
of
circuit
miniaturization.
As
circuits
approach
the
size
of
a
few
atoms,
further
miniaturization
becomes
increasingly
difficult
due
to
heat
dissipation
issues
and
other
physical
constraints.
Despite
these
theoretical
limits,
the
industry
continues
to
find
ways
to
squeeze
more
efficiency
out
of
ASICs.

Potential
for
Further
Efficiency
Improvements

While
the
density
of
circuitry
may
be
approaching
its
limits,
optimal
circuit
design
and
other
technological
advancements
offer
significant
potential
for
further
efficiency
improvements.
Water
cooling
techniques
and
advancements
in
firmware
have
enabled
higher
power
operations
and
fine-tuning
of
mining
units,
respectively.
These
developments
suggest
that
ASIC
commodification
remains
a
distant
prospect.

Impact
of
Manufacturing
Cost
Improvements

Even
if
efficiency
improvements
slow
down,
reductions
in
manufacturing
costs
could
have
a
similar
impact
on
mining
difficulty.
Lower
costs
would
allow
new
owners
to
tolerate
higher
bitcoin
production
costs,
rendering
older,
more
expensive
units
unprofitable.
This
scenario
underscores
the
importance
of
careful
depreciation
scheduling
for
investors
in
the
mining
industry.

While
these
challenges
pose
significant
risks
for
miners,
particularly
those
on
the
higher
end
of
the
cost
curve,
they
have
minimal
impact
on
Bitcoin
itself.
For
the
broader
cryptocurrency
ecosystem,
the
relentless
pace
of
technological
advancement
in
ASICs
continues
to
drive
innovation
and
competition.

For
more
details,
visit
the
original
source
on
CoinShares:

CoinShares.

Image
source:
Shutterstock