Obelisk Takes a Deep Look into the Crypto Mining World

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Obelisk – the crypto mining arm of Sia – has developed its own fork resistant ASIC mining rig, and during the creation process certainly learnt an awful lot about the crypto mining world. In a post on its blog, lead developer David Vorick explained the troubles it encountered and things it was forced to work around. The mining world is very much misunderstood and it can be confusing to get into. Applications for mining rigs are often built by developers that don’t fully understand the technology inside them, meaning a lot of power is being wasted and mining rigs are frightfully inefficient. Obelisk realized the full potential of a fully customized mining rig and chipset, so it set about creating its very own mining rigs.

ASIC Resistant Cryptocurrencies

ASIC resistant cryptocurrencies are relatively few and far between. The developers who create the ASIC-resistant algorithms are woefully unaware of the untapped potential of ASIC miners and their chips. To this extent, most forks that render an older generation of ASIC mining chips obsolete can be circumvented in a matter of months. CPU chips are incredibly flexible when it comes to their uses, and this means no ASIC-resistant algorithm will last for long.
In a recent bid to prevent ASIC mining chips contributing to the majority of the network hash rate, Monero has decided to implement a new fork every six months to switch up the algorithm. In theory this will prevent ASIC manufacturers from getting an ASIC miner to market for the Monero algorithm before the it changes once again. The average time from minimum viable product (MVP) is roughly nine months, three longer than Monero’s proposed algorithm forks.

The World of Secret ASICS

There is a deep underworld of secret ASIC mining chips, usually controlled by large manufacturing firms. They will often create an ASIC mining chip and run them for a considerable amount of time – possibly enough time to recover the design and development costs of the chip. Once they reach the break-even point, they will then release the tech to the market, further making huge gains. Once cryptocurrency developers are aware of the new ASIC mining chips, it is never long before a new algorithm will be released and that chip is obsolete.
ASIC chip manufacturers are often desperate to get their hands on the latest algorithms and create a new chip. So much so in fact that they will often pay off employees within related companies to leak the new algorithm, as a means to remain one step ahead and keep the secret mining world operating.
It is estimated that secret mining operations on Monero began during early 2017 and the hash rate accounted for the majority of all Monero network hash rate. This leaves the door open to 51% attacks and effectively makes the crypto world vulnerable. There is no way to tell whether these secret crypto mining farms have exploited Monero, but it is a real possibility.

Running Costs Versus Sale of Technology

For ASIC chip manufacturers like Bitmain, there is an enormous cost involved with creating these new chips. Some manufacturers decide to sell their chips as well as run a small selection of them, and some simply sell them. The decision boils down to a number of factors, the main two are electricity costs and mining profitability.
In New York, the government has recently introduced lower electricity rates for crypto miners, so ASIC manufacturers in this state have more incentive to run their own products as well as selling them. However, in locations where crypto mining electricity is still expensive, manufacturers will opt to simply sell their products. In the case of a manufacturer mining and selling ASIC chips, they will generate more money, but lack exclusivity. With exclusivity comes a higher price, so manufacturers who decide to only sell ASIC chips can charge extra for “exclusive rights”, balancing out the advantages.

Not All Chips Are Created Equally

The type of ASIC chip that is used in an ASIC miner effects its overall performance. The ill-fated Butterfly Labs created powerful chips that produced way too much heat. To resolve this issue, it added expensive cooling methods, this lead to ASIC miners that were inefficient and were unable to generate a profit. Bitmain creates chips using a method called place-and-route, which means it places chips, then solves the routing issues afterwards. This created inefficient ASIC chips that are slower and have less power.
Customized ASIC plan the routing, before placing the chips in the most advantageous locations, creating superior performance. However, fully customized chips take longer to get to market. For companies like Bitmain that try to remain ahead of the curve, place-and-route makes more sense. as by the time a custom chip will be ready, the market gap has been filled by a competitor.
This is only a brief view into the crypto mining world thanks to Obelisk, but there is so much more to it. The mining world can be secretive and confusing to understand, but Obelisk provides a unique insight into this relatively unexplored world.