The Bitcoin mining game has changed

ASCI or Application Specific Integrated Circuit machines have hit the Bitcoin mining market. The first machine arrived at a miner’s home in late January and since then there have been reports of shipped ASCI machines finding their way onto miners’ Bitcoin mining rigs.

Since ASCI machines are designed specifically for the task of mining Bitcoin, they are highly effective machines at what they are designed to do. High-end ASCI machines have a hash rate per second of over 1 million. A typical CPU running Bitcoin mining software has a hash rate per second of 1.5.

Needless to say, shipping ASCI machines has been a game changer in the Bitcoin world. CPUs aren’t even compatible with Bitcoin mining software anymore because a CPU running 24 hours a day probably wouldn’t see a Bitcoin for several years, even if it was mining in a pool.

This trend favors those interested in mining who also have thousands of dollars to spend on expensive hardware, as well as early Bitcoin mining adopters who have likely made a large profit from their early mining efforts. Those initial earnings could then be incorporated into the latest and greatest hardware and platform configuration to continue generating Bitcoins in the future.

Miners running relatively powerful GPUs are the most affected by the development of ASCI. The difficulty of successfully mining a Bitcoin block has increased to a level that can cause the cost of electricity to exceed the payout a GPU miner will see in Bitcoin year after year.

All this speculation is strongly linked to the stability of the price of Bitcoin in the future. If Bitcoin stays around the current $30 level, innovation will continue to progress. ASCI has in part contributed to the rally that Bitcoin has seen in the last 2 months. The USD to Bitcoin exchange rate has skyrocketed from $10 to $30. It’s hard to find an investment with that kind of return anywhere on the planet, so it’s only natural that Bitcoin is turning heads in recent days. But will this attention last? And if so, will it bring more scrutiny and volatility than stability to the young digital currency? In the long term, relative stability is the only trait that Bitcoin must establish if it is to achieve its original goal of being a viable and competitive currency on a global scale.

So will Bitcoin transcend the current label of a speculative instrument? The answer lies in a tangle of variables that cover the broad spectrum of humanity: politics, psychology, finance, fear, freedom, privacy, security… etc. Regardless of the outcome, it’s sure to be a riveting show.