Mining is an extremely competitive environment. After the introduction of ASIC miners, part of the community that mined cryptocurrency on GPUs began to resist the spread of ASICs. One of the consequences of this struggle is the ASIC-resistant movement.

Mining equipment

Initially, cryptocurrencies based on the PoW algorithm were supposed to be mined using the computing power available to the average user on the network. At first, coins were mined using conventional processors (CPUs), but as the popularity of cryptocurrencies grew, mining became an increasingly profitable activity. As a result, computing power manufacturers reproduced highly specialized hardware that could handle a specific hashing algorithm.

Not everyone in the mining community was happy about the appearance of ASICs. Application-specific integrated circuits (ASICs) have proven to be extremely efficient in mining, but in addition to these circuits, miners have been actively mining cryptocurrency using graphics cards (GPUs). And since CPUs and GPUs were available to most users, it became quite difficult to compete with ASICs, so GPU miners began to look for new coins to mine. With this came the idea of ​​ASIC resistance.

What is ASIC resistance

The concept of ASIC mining resistance emerged as an attempt to maintain a level playing field in mining, where smaller players with consumer-grade hardware could still participate and be rewarded for their contribution to the network hashrate. This concept is based on the fact that by developing or modifying the consensus algorithm, it is necessary to make mining on ASICs more difficult (very often to the point of impossibility). Thus, the network will become more decentralized and resistant to monopolization by large mining pools with investments unattainable for the average user. That is, we are talking about the democratization of mining and returning to small players the opportunity to receive rewards even when using non-specialized equipment.

Blockchain resistant to ASIC mining

The main approach to achieve ASIC tolerance is to use hard memory functions. These features require a significant amount of memory to be available to the mining hardware to perform the calculations required to mine a block. This significantly increases the cost of research, development and production of ASICs compared to those devices that can solve only one computing problem.

The Ethash mining algorithm, which was used to mine cryptocurrencies from 2015 to 2022, is an example of a hard memory function. Mining required reading a large amount of data, and this requirement would increase over time, making it more difficult to mine cryptocurrencies on older hardware. Using this memory feature created significantly more difficulty for ASIC mining than for GPU mining.

Similarly, the Grin blockchain uses a hard memory function called Cuckoo Cycle. This algorithm requires miners to find cycles in a large directed graph, which requires significant amount of memory and high-speed access to it.

ASIC Strikes Back

The problem with ASIC resistance is that if it is profitable to mine an ASIC-resistant coin, circuit manufacturers will find a way to overcome the resistance. For example, this happened with Ethereum. It took years to produce the first ASIC miners for it, but over time they began to make up 50% of the network hashrate. After the project transitioned to PoS, these ASICs had no choice but to migrate to another chain secured by Ethash – Ethereum Classic. And now it is unprofitable to mine Ethereum Classic using anything other than an ASIC.

Interestingly, before the blockchain switched to PoS, the arms race could continue with the development of the ProgPoW algorithm. It is a proof-of-work algorithm that modifies Ethash and is designed specifically to bridge the efficiency gap between ASICs and GPUs.

It is noteworthy that in the explanation of the proposal to introduce ProgPoW (EIP-1057), the authors refused from the term “ASIC resistance” and instead posited the goal of reducing the performance gap between ASICs and video cards to further decentralize the network and reduce the barrier to entry into mining. This initiative caused a lot of discussion, and many members of the community were inclined to favor it, but the transition to PoS put an end to the dispute, since mining ceased to be relevant at all.

High Resistance Coin ASIC

In addition to Ethereum, which was considered quite stable before the transition to PoS (at least until ASIC miners specifically designed for Ethash began to be produced), there are other coins with high resistance.

Thus, Monero (XMR) is an ASIC-resistant coin – no special equipment is required to create blocks. This cryptocurrency uses the RandomX hash function and the CryptoNote protocol, and therefore XMR coins can be mined using GPUs and even central processing units.

Safex Cash (SFX) is a cryptocurrency that uses the RandomSFX mining algorithm, which also makes it highly ASIC resistant. In addition, sustainable name Ravencoin (RVN) and Haven Protocol (XHV).

Conclusion

It turns out that ASIC resistance is never absolute. We are talking only about the varying degrees of susceptibility of blockchains to ASIC mining. Where ASIC mining will be particularly profitable, specialized devices will likely be developed despite resistance. In general, ASIC resistance can contribute to the decentralization and democratization of the network by lowering the threshold of hardware requirements. ASIC protection does not fully guarantee that the mining market on a particular blockchain will be ASIC resistant forever.