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ASIC vs CPU mining

An ASIC Bitcoin miner is designed exclusively for the purpose of mining bitcoin. Though significantly more expensive to purchase, they are far more powerful (higher hash rate) and electricity-efficient than CPUs and GPUs (graphics cards) – used for mining in the early days of bitcoin – and even FPGAs (field programmable gate arrays), which were, in 2011, the most efficient option. [3] According to Mike Murray, creator of The Geek Pub, a $2500 ASIC miner is as powerful as 400 GPUs, or 12,000 CPUs, which would cost $18 million. [4] For reference, as of February 2018, the Bitmain Antminer S9 possessed the highest available hashrate at ~14 TH/s, with an efficiency of ~0.1 Joule per GH/s, and cost $3200 on Amazon, not including the power supply. [5]

ASIC hardware mining

Mining is now so competitive, and the difficulty rate so high, that attempting to do so without an ASIC is unprofitable. [3] [4] [6] Because ASIC mining hardware is so expensive, most ASIC bitcoin mining is done by companies in thermally-regulated data-centers with access to low-cost electricity. Many of these companies lease part of their mining power as a service.[6] [7]

Cloud Mining

Cloud mining, or mining as a service (MaaS), is an alternative that allows individuals to mine bitcoins without handling their own hardware.[8] Because of the high cost it implies, many people may not want (nor be able) to invest in from-home ASIC mining. The hardware consumes high amounts of electricity, necessitates a powerful ventilation system, and is in itself expensive. As the writers at Coindesk put it, "cloud mining means using (generally) shared processing power run from remote data centres. One only needs a home computer for communications, optional local bitcoin wallets and so on"[8]

Several of the mining businesses listed below lease hosted processing power to customers.

Bitcoin ASIC mining companies

Listed below are some companies that produce bitcoin ASIC mining hardware and/or provide a cloud-based mining service.


ASIC mining pool in Iceland


CloudHashing ASIC mining pool in Iceland

KnC Miner

KnC Miner is a Sweden-based (Boden) start-up cofounded by Andreas Kennemar and Sam Cole in 2013, when they merged their IT consulting firm KennemarAndCole AB (KNC) with the chip designer house ORSOC in order to produce better bitcoin mining hardware than was available at the time.[9] During the following years, they managed to raise $32m in venture funding from investors, including Accel and Creandum, and became one of the industry's fastest-growing mining firms [10]

On September 2nd 2014, KnCMiner launched the cloud service KnC Cloud, with facilities located in a former helicopter hangar 15 kilometers away from a Facebook datacenter in the Arctic. This location is beneficial for any mining center, since the naturally cold air saves the company cooling costs.[11]

In May 2016 customers successfully sued the company over delayed shipments and problems with the Titan, one of their hardware products.[12] Later that month, KnCMiner declared bankruptcy.[13] At the time, Sam Cole denied any connection between the lawsuit and the bankruptcy filing, claiming that the latter was a preemptive measure against the halving of the bitcoin block reward (which became 12.5 BTC that year).[13] In August of the same year, KnCMiner was bought by GoGreenLight, to continue operating the ASIC mining pool and data centers. [14]


CloudHashing was founded by Emmanuel Abiodun in 2013. It operates from data centers in Kansas City with hardware by Butterfly Lab, Terrahash and KnCMiner. It was the first firm to offer MaaS.[15] In October of the same year, CloudHashing built a facility in Iceland, which generated more than $4 million worth of Bitcoins at the time [15] The company would lease 80% of its computing power to costumers. By December 2013, they had 4500 customers who were paying $999 a year to use machines that at the time cost $20,000 on the open market. [16]

In March 2014 Cloud Hashing had the combined calculating power of ~1,500 Th/s. The entire Bitcoin network’s calculation power was 38,000 Th/s; thus, 4% of the entire network power was concentrated in the hands of this company.

After a successful 8-month-long period in 2014, during which the company mined over 35 thousand bitcoins at an equivalent value of over US$21 million based the price of bitcoin at the time, Cloudhashing merged with the advanced hardware manufacturer HighBitCoin to form PeerNova, releasing the PetaOne Blade, which featured a 28nm chip with a power efficiency of 0.35W per GH/s. [17]

In 2015 CloudHashing signed a supply deal with Australian bitcoin company digitalBTC, to run digitalBTC hardware in data centers in Iceland and Texas. This deal was dissolved later that year when digitalBTC pulled out of the agreement. CloudHashing then began increasing their customers' management fees and buying back contracts.[18]

As of November 2016, CloudHashing's website displayed the message "The cloudhashing service has been discontinued. If you are a previous cloudhashing customer awaiting payment of your account balance, please email" [19]

Allied Control


Asic mining pool in Hong Kong (asics card mining)


Liquid cooling of circuits

Allied Control is a Hong Kong based immersion cooling and bitcoin mining company. It was acquired by BitFury in 2015.[20]

The mine is both cheaper to operate and more effective than its competition, thanks to their two-phase immersion thermal management technology, which is 4000 times more efficient at cooling chips than air. explains "electronic components are submerged in a bath of dielectric heat transfer liquids, which are much better heat conductors than air, water or oil. With their various low boiling points ( 49°C vs. 100°C in water), the fluids boil on the surface of heat generating components, and rising vapor passively takes care of heat transfer. In contrast to submersion oil cooling, liquids are clean, environmentally friendly and non-flammable. No heat sinks, pumps, and jets are required to keep hardware cool. Circulation happens passively by the natural process of evaporation and without spending any extra energy." [20]

Mining businesses in China also boast the advantage of having access to some of the planet's cheapest electricity.[21]


1gh/s exchange rate - ASICs card mining

CEX is a bitcoin mining company and an exchange platform. It used to also provide MaaS, lending its computing power to users to mine bitcoins in their own ASIC mining pool,, and sell them in their exchange. The guiding principle of this operation is to set a price for 1 Gh/s during exchange trading. After that, computing power was rented in the necessary amount and immediately put to use mining for the company’s pool.

If for any reason a customer did not need mining capabilities anymore, the rented power could be sold back immediately or some time later. All this is carried out within the company’s power exchange. The exchange also allows for exchange of more common “goods” – Litecoin and Namecoin.

Cex suspended its cloud mining activities in 2015, claiming that mining was no longer profitable and blaming declining revenue on bitcoin's decreasing price. [22]

The CEX precedent

This way of providing computing power became very popular. So popular that computing power lent to miners all around the world has neared half of all the Bitcoin network power, increasing the chances of a 51% attack. CEX isn’t going to destroy Bitcoin if only because it’s their primary way of earning money. To lower its computing power share, the company has suspended new client registration. At the moment the Company’s pool’s power equals to around 30% of the entire network’s computing power.

Chinese mining business

By 2017, China manufactured most of the world’s mining equipment, and Chinese ASIC mining pools were estimated to controlled more than 70% of the Bitcoin network’s collective hashrate. Chinese exchanges were also world leaders in trading, but the amount decreased when the PBOC decreed that exchanges could no longer offer 0% trading fees.[21]

The main reason behind China's supreme efficiency in the mining business is the cheap cost of their electricity – most of it is powered by hydro-electric plants or subsidized by the government, making worldwide competition extremely difficult. [21]

Legalities of the mining business

The bitcoin mining industry is not currently regulated nor taxed in any way, because from a legal point of view, nothing is being produced. Allied Control is researching the applicability of other mining platforms, including mines built into freight containers placed on ships at sea. Such design may come in handy should regulators toughen measures against cryptocurrencies.

Downsides of the mining business

A first downside of the surge of huge mining business is that the increased hashing power in the network considerably raises the difficulty rate. This, together with the sky-high prices of ASIC miners, has made mining on personal computers impossible for common users, which conflicts with the original spirit that absolutely anyone can mine Bitcoin for themselves, without having to pay fees to a third party.

Mining power may become distributed throughout several large companies that will either lend this power or mine bitcoins for themselves. If the second scenario plays out, user-based mining will disappear altogether.

Another big problem is that any one company may lay hold of 51% of the network's computing power, successfully monopolizing control of the protocol.

ASICs for Scrypt mining

Before 2014, ASIC miners were only built to work with the SHA-256 hash function (used by Bitcoin) Most individual miners were transitioning to mining Litecoin and its forks, which are all based on the Scrypt algorithm and didn’t have specialized equipment manufactured for them. Building large mines for Litecoin was not profitable because they needed a multitude of GPUs which consumed huge amounts of electricity and required powerful cooling systems.

But by mid-2014 ASIC miners for Scrypt began to sell on the market, raising the difficulty of Scrypt-based crytpocurrencies.

See also

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