The Bitcoin Mining Game Has Changed

ASCI or application-specific integrated circuit machines have arrived in the Bitcoin mining market. The first machine arrived at a miner’s home in late January and since then reports have been pouring in of shipped ASCI machines finding their way into miners’ Bitcoin mining rigs.

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

It goes without saying that sending ASCI machines is a game changer in the Bitcoin world. CPUs are no longer supported by Bitcoin mining software because a CPU running 24 hours a day probably won’t see a single Bitcoin for years, even if it’s mining a pool.

This trend favors those interested in mining who also happen to have thousands of dollars lying around to spend on expensive hardware, as well as the early adopters of Bitcoin mining who are likely to make huge profits from their early mining efforts. Those early profits can be rolled into the latest and greatest hardware setup and rig to continue generating Bitcoins in the future.

Those miners running relatively powerful GPUs were hit the hardest by the ASCI development. The difficulty of successfully mining a block of Bitcoin has increased to a level that can make the cost of electricity more than the payment seen by a GPU miner of Bitcoin every year.

All of this speculation is closely tied to Bitcoin price stability going forward. If Bitcoin stays at the current 30 usd level then the trend will continue to improve. ASCI has in part contributed to the rally seen in Bitcoin over the past 2 months. The USD exchange rate for Bitcoin increased from 10 usd to 30 usd. It is difficult to find an investment with such a return anywhere on the planet, so it is natural for Bitcoin to attract attention 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 an attribute that Bitcoin must build upon if it is to fulfill its original purpose of becoming a viable and competitive currency on a global scale.

So will Bitcoin surpass the current label of speculative instrument? The answer lies in a tangled web of variables that includes a wide spectrum of humanity: politics, psychology, finance, fear, freedom, privacy, security… and more. Regardless of the outcome it is sure to be an interesting show.