An ASIC (Application Specific Integrated Circuit) is an integrated circuit designed to solve a strictly defined task. Outwardly, such a silicon chip resembles an ordinary processor or memory module, but, unlike universal computing devices, it can efficiently perform only the narrow set of operations built into its design.
In the context of cryptocurrencies, ASIC chips are created for a specific hashing algorithm. For example, in the case of Bitcoin they are optimized to compute the SHA-256 algorithm that underlies its mining. Because the entire architecture of the chip is subordinated to a single operation, an ASIC achieves performance and energy efficiency unattainable by universal processors (CPUs) and graphics cards (GPUs) on the same task.
The flip side of such specialization is a lack of flexibility. An ASIC designed for one algorithm is, as a rule, useless for mining cryptocurrencies that use a different algorithm. That is why the appearance of an ASIC for a particular network noticeably changes its hash power balance and often pushes out miners using ordinary equipment.
