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Over the past decade, the machines that maintain the Bitcoin network have undergone rapid technological development.
Mining equipment is a fundamental feature of the success of the bitcoin network because these machines determine whether or not it is profitable for miners to do what they do – that is, process the calculations needed to embed blocks of transactions on the blockchain.
While somewhat overlooked, the history of bitcoin mining equipment is also a key explanation for why the activity of mining has evolved over the years into a multi-billion-dollar industry. The mining industry continues to evolve today, though there are signs to suggest its development is slowing down.
Bitcoin mining was once nothing more than a lucrative hobby for nerdy cryptocurrency enthusiasts. The only hardware required, in the beginning, was a simple computer. Things have changed a lot in less than 10 years.
CPU Mining
On Jan. 3, 2009, pseudonymous creator Satoshi Nakamoto mined the first bitcoin block. As the only miner on the bitcoin network at the time, Nakamoto didn’t need specialized equipment to launch the bitcoin blockchain. He was able to create bitcoin blocks using an average personal computer.
Hardware needed to mine new coins evolved over time as new miners joined the Bitcoin network and started to compete for block rewards.
In 2009 the first bitcoin miners used standard multi-core CPUs to produce BTC at a rate of 50 per block. If you had a couple computers lying around with decent specs you could have earned about five dollars a day. The difficulty of mining (amount of computing power necessary) was so low then it was worth it for hobbyists and crypto nerds to participate.
Today, mining 50BTC would reward you in excess of $434,000 per block. A little over a month ago, when it was trading at nearly $20K, that same nerdy “hobby” would have netted you nearly a million dollars a pop.
In case you are going to hop in your time machine don’t go back to ancient 2009. It was a strange time where people used GPUs to play video games, instead of playing them with cardboard like we do in the present.
GPU and FPGA Mining
The first major innovation to bitcoin mining hardware came shortly after a market value for bitcoin was established.
On May 22, 2010, computer programmer Laszlo Hanyecz paid 10,000 BTC for two Papa John’s pizzas. The pizzas were worth around $25. According to cryptocurrency data provider Coin Metrics, bitcoin market price then appreciated in July to around 8 cents. By the time the bitcoin price reached 10 cents in October 2010, the first mining device leveraging graphics processing units (GPUs) was developed.
Except mining difficulty continued to rise, and with it, the power requirements would soon become too steep for your average hobbyist to make any money. By June 2011 field-programmable gate arrays (FPGAs) were becoming all the rage.
ASIC mining
The third major innovation to bitcoin mining likely required the largest amount of dedicated resources, time and development to achieve. Rather than repurposing the software and hardware parameters of existing machines, efforts to create an entirely new machine that would only mine bitcoin finally paid off. In 2013, a China-based computer hardware manufacturer called Canaan Creative released the first set of application-specific integrated circuits (ASICs) for bitcoin mining.
These devices, unlike CPUs, GPUs and FPGAs, were designed at their outset to mine bitcoin. This meant that all hardware and software components of these ASIC devices came pre-designed and optimized to compute strictly those calculations necessary to create new bitcoin blocks. The efficiency gains from ASICs could not be matched by any of the more general purpose devices that preceded it.
While Canaan Creative was the first bitcoin ASIC manufacturer, others such as Bitmain and MicroBT also came up with new versions of ASIC bitcoin mining devices with increasingly advanced hardware.
As in every history, in crypto history there are many good and bad stories.
In 2017 was a real mining hype, there were lots of success samples. ASIC Antminer S9 appeared firstly in 2016. The device is intended for mining cryptocurrencies on the SHA-256 algorithm, the main cryptocurrencies on this algorithm are Bitcoin and Bitcoin Cash.
ASIC delivers 14TH / s and consumes 1300W, earlier S9s have less power, there were versions at 12.5TH / s, 13TH / s, 13.5TH / s, of course, and they consumed a little less from the outlet.
The most Crypto mining hype was about S9, with the growth of the market in 2017-2018, how the price grew on them and how those who were at the very beginning who bought the equipment on the cheap before the start of the hype won in the end. So the most important thing in this history was to buy ASIC equipment and mine before the market expand.
In 2017 was a really mining heyday. And the same as it goes in nature after every sunrise comes sunset. Mining industry is not an exception.
Most of 2018 was accompanied by a requiem for bitcoin and the cryptocurrency market as a whole. After the rapid, disarmed all skeptics' take-off last winter, the first digital currency depreciated inexorably for many months, dragging out all the other coins. The unshakable faith of investors in revolutionary blockchain technology and the money of the future turned first into panic and bewilderment, and then into anger and rejection. In spite of all it was too early to bury bitcoin.
Rise from the ashes
Despite a number of problems, the crypto industry has good prospects for further growth. However, the situation is complicated by the general decline of the global economy and the fact that now all markets are in a fever. Some believe that during the crisis, cryptocurrencies will become a conditional safe haven for investors, while others are sure that they, on the contrary, will seek to avoid risks and will prefer traditional investment instruments. How it will actually be is unknown, however, analysts at the Weiss Ratings rating agency claim that now is a good time to acquire cryptocurrency. And there are several objective reasons for this.
The decrease of hype stabilized the market and reduced volatility, this scared away amateurs, but attracted the attention of bankers and large funds, which can significantly affect the value of digital assets. Now on the market there are mainly those who will keep the cryptocurrency in spite of any drops, which means that for a group of large players interested in a collapse of the course, there is little point in continuing to drive the price down. At the same time, digital currencies are becoming commonplace everywhere.
As a conclusion we can say that everything is quite cyclical - who managed to enter the market at the end of 2016 and the beginning of 2017 (although there was still no wild market growth) that was a winner. Who jumped in the last moment - already closer to the end of 2017 (when growth was already in full swing) - he missed the opportunity! And it was sad It was necessary to start much earlier. And previous years have shown how cyclical the market is. And it is up to you to decide whether to start now or wait when the market accelerates and jump into the last car.
It should be noted that the industry was actively developing on the eve of halving. The largest increase in hash power can be observed in North America and Canada. This is evidenced by an increase in the bitcoin hash in March, when the value reached 133.29 EH / s. Active investments in mining on the eve of halving indicate that new companies are counting on an increase in the value of the asset.
Many analysts are confident that, as after the first two halving in 2012 and 2016, the value of the asset will increase. Against the backdrop of the global economic crisis, interest in cryptocurrencies will increase due to the quarantine due to the COVID-19 pandemic and the instability of the oil market. According to bold forecasts, the price of bitcoin will increase to $ 50,000 by the end of the year. So there is a huge prospect in the industry.