Cryptocurrency mining algorithm: an overview of the main hashing algorithms


A mining algorithm, or hashing algorithm, is required to decrypt data in a cryptocurrency network and determine its reliability. Specialists-cryptographers are engaged in the development of algorithms. The scheme is based on processing a “hash” – a number encrypted from a string of content. It is not possible to encrypt two strings in such a way that you get the same hash.

The main idea of ​​Bitcoin mining is that miners conclude a certain group of fresh transactions in a single block, and then perform a computational hashing operation many times until one of them finds the desired number. After that, the transactions can be considered confirmed.

Cryptocurrency mining algorithm: what is it and why is it needed

In cryptography, there is the concept of a hash function, it is responsible for encrypting data, which is subsequently decrypted by the cryptocurrency mining algorithm. The hash function is designed in such a way that there is no “easy way” to get the desired result – you can only select values ​​over and over again until you find one that works.

In Bitcoin, a successful hash is one that starts with a certain number of zeros. The difficulty of finding grows exponentially. At the moment, the number must have 17 consecutive zeros for it to be considered suitable. Thus, only one of 1.4×1020 numbers will result in a successful result. Finding a hash is even more difficult than one grain of sand that exists on Earth.

Watch a video that explains what the hashing algorithm is (include subtitles and Russian translation):

Algorithm for mining top cryptocurrencies

List of popular and promising cryptocurrencies available for mining and their hashing algorithms:

XRPXRPXRP Ledger Consensus Protocol
Bitcoin CashBCHSHA256
Bitcoin SVBSVSHA256
Ethereum ClassicETCEthash
NEMXEMProof-Of-Bible-Hash (POBH)
Bitcoin GoldBTGEquihash
GrinGRINCuckoo Cycle
Libra FacebookLIBRALibraBFT
DecredDCRBlake (14r)

Basic cryptocurrency mining algorithms

Consider the most common mining algorithms today.


SHA stands for Safe Hash Calculation. This computational technique ensures that the information in the cryptographic dataset is immutable. The information is encrypted or encrypted, so it is safe and only people who have the code can access it.

In 2001, the US NSA developed the SHA-2 algorithm. SHA-256 is a variant of it. The name comes from the fact that it works with 256-bit numbers. In other words, a specific bit of data is encoded and transformed into a 256-chunk code. The processing time for the code in SHA-256 takes 6-10 minutes.


The Scrypt hashing algorithm uses 11 logical protocols for proof of work (PoW) at once. The biggest benefit of using Scrypt is efficiency, as it consumes 30% less power and requires less cooling.

Tiered computation begins by loading information using a SHA-256 hash process. At this time, the analysis of the structure of links is calculated, without which the completion of hashing is impossible. Compared to SHA-256, Scrypt uses less power, but significantly more memory. Also in Scrypt it is possible to reduce the size of the hash, which makes the calculation faster.


Ethash was developed specifically for Ethereum in order to reduce vulnerability to ASIC miners. The algorithm is based on data mining. Earlier, Ether used an algorithm called Dagger-Hashimoto, and Ethash is essentially an updated and improved version of it.

There was a strong emphasis on ASIC protection, but this did not help for long – the interest of ASIC manufacturers in Ethereum increased, and soon such devices were still released on the market, which caused outrage in the community. It was even suggested to “ban” too powerful devices connected to the network.


The X11 algorithm was developed in 2014, and just like Ethash was needed to counter ASIC miners and keep the owners of video cards and processors competitive. X11 works with 11 different hash functions at the same time. First, the first function creates a hash, then passes the baton to the second, and so on.

All eleven algorithms included in X11 have been put into operation by the US National Institute of Standards and Technology to develop a new SHA-3 function with improved security over its predecessors. There were 64 candidates, only 11 passed the competition.


CryptoNight is a mining algorithm designed for use on ordinary processors. The algorithm is initially coded in the CryptoNote codebase. Cryptonight takes 2MB of data, extracts the underlying data, mixes it with sequential data, and produces the perfect result.

The main advantage of the protocol is the possibility of additional mixing. This makes transactions more confidential. CryptoNight is used by many cryptocurrencies, of which Monero is the most famous.


This cryptocurrency mining algorithm is an asymmetric Proof-of-Work system focused primarily on memory. The amount of work that a device can perform when working with this algorithm is mainly determined by the amount of RAM with which it is equipped.

Equihash’s algorithm is called ASIC resistant. Memory is an expensive computing resource, and therefore its optimization on an ASIC chip will be an expensive and unprofitable process for the user. As a result, the ASIC mining process will become less efficient and powerful.


Decred cryptocurrency uses a hybrid consensus mechanism that combines the principles of PoS and PoW. Such a system ensures that the development of the project can not depend on the control of strong interest groups, and changes can not be made to the blockchain without the consent of the community.

PoW in Decred implies a reward of 30 coins for a mined block, which are divided between the miners, voting and the project development fund. Voters can then vote for or against the proposed adjustments in the chain. For the fact that they protect the network by storing their bets, they are given 30% of the income from each formed block.


Quark is a hash-based cryptocurrency mining algorithm with nine levels of encryption. The algorithm does not require a lot of RAM, and also contains built-in protection against high-level hacker attacks (64-bit). Differs in low energy consumption. Quark was developed in 2013 and implemented six encryption functions: Grostl, Blake, Keccak, etc.

The Quark algorithm is used in PoS and PoW consensus mechanisms to keep the cryptocurrency system up and running in a more specific and secure manner. Compared to SHA-256 used in Bitcoin, Quark is resistant to SPOF (Single Point of Failure), which can cause the entire system to fail.


X15 is based on X11, but instead of using 11 hashing functions, it uses 15. Due to this move, the resistance to hacker attacks is significantly increased. If a hacker breaks into one of the fifteen functions, then the developers will immediately improve it to keep the system safe. An attacker who wants to hack the entire system will need to go through all 15 functions one by one, and do it quickly.


A secure hashing algorithm, on the basis of which at least ten advanced options have been developed, including SHA-256. All hash functions used in the family are based on the Merkle-Damgor structure.

The bottom line is that the original information is divided into blocks after complementing, and then each of the blocks is divided into sixteen words. Further, each message block is passed through a cycle consisting of 80 or 64 rounds and is mixed. At each stage, two words are transformed, and the function of this transformation is set by the remaining 14 words.

Cuckoo Cycle

Cuckoo Cycle is one of the most promising ASIC resistant algorithms to date. It was originally invented to protect against email spam. However, the architecture turned out to be quite suitable for mining cryptocurrencies on GPUs. Focuses mainly on memory usage, therefore requires significantly less computational power than other PoW algorithms. Consequently, cooling costs are also reduced.

Other algorithms

There are also the following types of cryptocurrency mining algorithms:

SHA-3 (Keccak). The protocol is based on the Sponge design. To obtain a hash, the initial information is taken, and then padded to a length that is a multiple of R. A byte, some number of zeros and a terminating byte with the value 0x are added to the message. Then, to obtain the desired number, a hash function is repeatedly applied to the received data.

Blake. It consists of three main components – an internal structure that guarantees collision protection, an iteration mode that resists external attacks, and a compression algorithm. The result is a carefully parsed, safe function.

Lyra2RE. It was developed as a replacement for the outdated Scrypt-N algo for the Vertcoin cryptocurrency. The main goal is to reduce energy consumption in the process of mining tokens. The algorithm was successfully replaced in mid-2014.


Most often, when it comes to mining cryptocurrencies, I mean the SHA-256 or Scrypt algorithm, because today they are used most often. But knowing about the rest of the options is also useful and interesting if you want to keep abreast of what is happening now in the cryptocurrency industry.

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