Rumors have surfaced that Bitmain is developing a powerful ASIC that threatens to increase the centralization of the Ethereum blockchain.
Related Story: How Bitmain Will Ruin Ethereum Miners: Performance Analysis Of The E3 ASIC
The memory bandwidth, the rate at which data is read by a computer’s processor or stored in a memory chip, has limited ASIC development on the Ethereum blockchain.
Mining Ethereum was programmed to be memory-bound by design. This design prevents the spread of ASICs in the Bitcoin network, thereby increasing the decentralization and security of the Ethereum network.
How Ethereum reaches memory limits
The Ethash algorithm is based on the generation of a so-called DAG, which is also referred to as a directed acyclic graph. Retrieving the DAG from the computer’s memory is the main limiter on how fast a computer chip can run the Ethash algorithm.
The size of the DAG is based on the current blockchain length of the Ethereum and increases proportionally to the size of the blockchain. The DAG is regenerated every 30,000 blocks or approximately every five days at the current block rates.
To date, the DAG file is 2.4 GB.
One important point to note is that mining is limited by the DAG size. If the memory of a GPU is smaller than the size of the DAG file, it is impossible to mine the cryptocurrency with this GPU.
This limitation on memory size also limits the scope of the mining ASIC designers. There are some technical limitations that make it difficult to build memory into cryptocurrency ASICs.
Bitmain market environment
Nvidia posted net income of $ 1.7 billion in 2017
This limitation of the Ethash algorithm makes it difficult to create an ASIC that is less expensive than a GPU. The primary chip designers in mining, Nvidia and AMD, have an advantage in this regard.
Both companies can leverage massive supply and logistics chains to cut the cost of making chips.
The manufacture of chips is incredibly capital intensive. Manufacturing houses, the places where microchips are built, cost billions of dollars to design and build. Only a few factories can produce the latest chips.
All of these factors limit a new entrant like Bitmain.
AMD, a much smaller company than Nvidia, had net income of $ 179 million in 2017
However, Bitmain has become extremely profitable in a short period of time.
According to Bernstein Research, Bitmain made $ 3 billion to $ 4 billion in profit in 2017, more than Nvidia and AMD combined.
With so much cash available to the company, it’s possible for it to break into the chip design niche for cryptocurrency.
How to create an Ethereum ASIC
ASIC chips are only useful if:
- The dollars per GB of memory bandwidth are less and there is enough memory to store the DAG file
Dollar / (GB / sec.)
- The chips are more energy efficient, provided they are as powerful as available GPUs
Watts / (GB / sec.)
Has Bitmain successfully developed a chip that is cheaper or more energy efficient than the GPUs from Nvidia or AMD?
The rumored F3 Ethereum miner
Bitmain’s Antminer S9 only uses 512MB of memory
Recently, the mining and Ethereum community on Reddit was in an uproar over a rumored ASIC developed by mining giant Bitmain.
According to the Chinese news website Tech News, the F3 Ethereum Miner is said to have 72 GB of DDR3 memory and has been in production since February.
Bitmain is also said to be building relationships with Taiwanese chip makers to further reduce the cost of these chips.
According to China Tech News, the F3 is expected to hit the market in the second or third quarter of 2018.
AMD’s RX570 is one of the most popular Ethereum mining GPUs
In an unverified post on Reddit, a picture of a suspected F3 miner can be seen in action. In the picture, an F3 generates 1500 MH / s, which corresponds to 50 RX570 GPUs.
In response to the threat posed by the new ASIC, the EIP (Ethereum Improvement Proposal) repository opened a thread with a referendum to hard-share the Ethereum blockchain and make Ethereum more ASIC-resistant.
Members of the Ethereum community say a hard fork in the Ethereum blockchain would hinder Bitmain’s development of the F3.
One of Etheruem’s leading developers, Vlad Zamfir, ran a poll on Twitter asking the community if they would support a hard fork on the Ethereum blockchain to delay ASIC development.
Would you support a hard fork that would make ETH ASICs obsolete? (I just wonder this is not a suggestion.)
– Vlad Zamfir (@VladZamfir) March 28, 2018
Given this recent threat, it seems like one thing the community agrees on is that it is difficult to fork the Ethereum blockchain. The move could also prove unnecessary considering that Ethereum plans to move to evidence of stake, possibly by the end of 2018.
All competing stakeholders can make changes difficult.
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