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ASIC’s crypto mining battle – The Background

When Chinese-based company Bitmain released its first ASIC, the world of blockchain mining had forever changed. It immediately set off a divide in the crypto-community between those who preferred a decentralized system, supported by the use of GPUs, and those who saw the potential and benefits of an ASIC.

Before Bitmain, companies like Nvidia and AMD, currently the two largest producers of GPUs, were seeing boosts in revenue as crypto-enthusiasts rushed to buy their products for at home mining. Nvidia couldn’t meet demand, driving up GPU prices, leaving the company with $289 million in revenue from mining sales alone.  But Bitmain’s entrance into the market was a challenger. The company clocked in neck-and-neck with Nvidia according to their 2017 revenue reports.

But what most people don’t realize is that these two products are really one in the same, with companies like Nvidia and AMD referring to their products internally as ASICs. What distinguishes them is their flexibility; GPUs are designed for wider more general use, while ASICs are tailored to work on one specific application.

Despite this, the market divide between GPUs and ASICs is very present and very real. So, what are Nvidia and AMD doing to combat their new challenger Bitmain?

Nvidia & AMD vs Bitmain –  The Truth about combat

The truth is, they aren’t doing much. Both Nvidia and AMD have continued to tout that their graphics cards are designed to support a large number of applications, and for Nvidia, the gaming market was a top priority. Though Nvidia’s Titan V, with its fast computing and very expensive price tag, goes well beyond the needs of any gamer.

Still, AMD announced in mid-2017 that their long-term growth plan did not take into account cryptocurrency mining. Six months later, CEO Lisa Su followed up, stating that the company had an interest and willingness to participate in blockchain mining technology, but were waiting to see how businesses and industries would adopt it. Su also stated that consumers purchasing GPUs for mining “represented only a mid-single digit percentage of buyers.”

Jensen Huang, CEO of Nvidia, echoed Su in his Mad Money interview on CNBC this past March. He remarked on blockchains longevity, saying that this “low-cost way of exchanging value was going to be here for a long time.” Huang went on, stating that Nvidia was the “world’s largest installed base of distributed supercomputing,” citing this as the reason mining had become a popular use for Nvidia’s GPUs.

While both companies have acknowledged the increase in GPU sales due to the crypto-mining consumer, neither has shown a reliance on the market. Instead, they have continued to seek new prospects for their GPUs use. Nvidia in particular, whose GPUs currently power larger data centers and computing systems, have begun to reach into the AI market. Notably, the use of their product in the development of autonomous vehicles.

Is there The Real Threat for ASIC’s ?

As AMD and Nvidia continue on their path of least resistance, the bigger concern for Bitmain and other ASIC producers, is with the blockchain community and developers. Vertcoin has continuously upheld their belief in decentralization, ensuring resistance to any attempt to create a Vertcoin specific ASIC. Stopping these developers in their tracks, Monero quickly introduced a hard fork to their CryptoNight algorithm when they learned of development of a Monero specific ASIC.

Companies like Bitmain must also be leery of future governmental regulations that could affect production or revenue, given that ASIC opposition has always rallied around fear of centralization and third-party risks. But David Vorick, developer of Sia, nuanced this point, arguing that GPU mining too could attract a dominant player, given its rising profitability, thus leading to its own possibility of third-party risks.