A question to experienced miners

[duffann]

Hello,

I am curious about the past of the mining. As I heard and rea many posts on the forum , gpu mining for scrypt was very profitable back in 2014 but then the asic miners came and it was not profitable anymore. I think they are produced for only one algorithm is that correct ? So for example they cant mine for eth or zcash ?

Another question is , for example why did not they produce for eth and zcash ? I hope they will not so we will continue to use our gpus but lets say they produced for these algos , what will happen for gpu mining ? is it possible new coins come with different algos or what ?

Thanks

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[Vann]

A number of factors caused GPU mining to become unprofitable in the second half of 2014. You had the development of ASIC's for Scrypt and X11, which were the majority of coins being released at that time. There was the mega pool development that mined the most profitable coins, only to dump them for BTC, suppressing the price for GPU miners. The market was also much smaller back then, so you also had people with lots of money manipulating prices. If all that wasn't bad enough, you had the BTC price crash to $200, which drag all other coins with it.

Unlike GPU's, ASIC's are developed to do a single task, which is why they are so efficient. It's easier to create ASIC's for algorithms that are not memory intensive like SHA-256 or Scrypt. ASICS for other algorithms are much harder to produce and require a lot of development costs. There is also the risk that once it's determeined that an ASIC has been produced, the coin devlopers could change that algorithm parameters, rendering it useless. Similar to what Vertcoin did when they switched from n-scrypt to Lyre2E.

[Undefined31415]

For a while, back in 2012 (when Bitcoin SHA256 ASIC preorders were going on), quite a few of us thought scrypt ASICs wouldn't be worth producing for a long time.

In theory, an ASIC could be designed for mining any individual currency, and a well-designed one would beat out GPUs for efficiency, but as Vann said above, it's generally more difficult (and thus cost-prohibitive) to create ASICs for those with more memory-intensive algorithms.

The idea with the more resistant cryptocurrencies like Ethereum and Zcash is not necessarily to have an entirely "ASIC-proof" algorithm behind them, but one resistant enough that nobody finds ASICs worth developing, and that's how it will *probably* remain for some time.

Considering all the people with GPUs, if the current coins were magically flooded with application-specific devices that crushed GPUs in terms of both efficiency and effectiveness (highly unlikely), I could see a new algorithm being used, or an existing coin with a more obscure mining algorithm becoming more popular. But if we were in a world where that happened anytime soon, there's no telling what would happen.

If you check out the pages on Zcash, they're careful to say that Equihash ASICs, while currently "not economically implementable", aren't impossible to make, so they're still unsure about what will happen in the distant future.
https://z.cash/blog/why-equihash.html
https://z.cash/support/faq.html

[duffann]

Thanks for replies. So we can say for now that gpu mining will continue to be ok for the near future.