Application Specific Integrated Circuit mining with a is a chip specifically created to execute one task, like solving the SHA-256 algorithm puzzle. It’s the most power efficient method of mining various coins at a much faster rate than any normal desktop or laptop might allow.
ASIC chips have been in existence for some time, but were not widely known outside of technological circles prior to the rise of cryptocurrencies and cryptocurrency mining. For example, your smartphone includes an ASIC designed specifically to make and receive phone calls.
When Bitcoin was first released it was mined using the CPU of a computer, and in fact the Bitcoin whitepaper made the assumption that CPUs would be used for mining, calling proof-of-work “essentially one-CPU-one-vote.” This state of affairs did not last long, and by 2010 GPUs were being used for mining Bitcoin as they were capable of processing hash functions much faster than the CPUs that had previously been in use.
Because mining is a competitive process, with each node competing to find the solution to the hash as quickly as possible, CPUs were no longer viable for mining. GPUs were soon overtaken by field-programmable gate arrays (FPGAs), and by 2013 ASICs had taken over the task of Bitcoin mining, as they were the best suited at solving a hash as quickly as possible, due to the fact that they were created to do just that task.
The Bitcoin community has been divided in its response to the rise of ASIC mining, as it makes what was once available to all once again partially centralized, as ASIC mining equipment is expensive and prohibitive for the average user. Some coins have claimed to be ASIC resistant as they didn’t use the SHA-56 algorithm, Litecoin was one such, but ASIC mining has been developed for it. Currently ZCash, which uses the Equihash algorithm is not minable using ASIC chips, but it is not certain if that is because it is not possible, or because the ASIC manufacturers haven’t found it to be profitable.
Vertcoin, which bills itself as “The People’s Coin”, and uses a memory-intensive and ASIC resistant algorithm known as Lyra2RE, has said it will fork its chain to increase memory requirements if an ASIC chip is built to mine it.