Scrypt ASICs arriving

With the start of the third quarter in 2014, new Scrypt ASIC miners will start being delivered soon. One month ago, manufacturer KnCMiner already announced it had almost finalized its 400 MH/s Titan Scrypt miner, and shipping would take place “well within” the third quarter. The miner was priced at about $10,000, which is the same price many of the competitors apply to their top performing miners. Earlier this year, KnCMiner confirmed it had already received $2 million worth of pre-orders. These orders were made in just four hours.

Scrypt Coins losing value

With these Scrypt ASIC miners now set to start appearing in the network of Scrypt coins such as Litecoin and Dogecoin, these coins are now taking heavy hits in their market value. Litecoin has lost almost 30 percent of its value over the past month, while Dogecoin has lost more than 40 percent of its value. It should be noted that in the case of Dogecoin this is worsened by its current existential crisis.

Impact

The overwhelming success in the number of pre-orders means Scrypt coin networks will be flooded by more ASICs than they can handle. The $2 million worth of pre-orders for KnCMiner means it had sold 200 Titan miners, while it was planning to build and sell 2,500 in the first batch. The first batch would therefore be worth $25 million in total, or about 10 percent of Litecoin’s and Dogecoin’s combined market value. This thus not includes other batches and orders at other manufacturers.

Proof of Work mining algorithms are competitive by nature, but the sudden addition of this many ASIC miners will certainly take competition to another level. At current rates, it seems impossible for most investors to earn back their investment. It does, however, seem certain that they will push away most of the current miners in the network. This creates a lot of uncertainty as it is not possible to tell in what shape the network will end up and how this will affect security, explaining a significant part of the recent drop in value.