MINING ALGORITHMS

Cryptocurrencies are a trend for investment and powerful earnings that is currently attracting great interest among “miners” and large companies around the world. However, not all of them are familiar with cryptography, which (if you want to succeed in the mining field) is worth knowing about. Today, you will learn about all the intricacies of the main mining algorithms.

SHA-256 mining – the classic algorithm

In fact, SHA-256 is a hash function developed by the US NSA. Its task is to hash an arbitrary set of data to a certain value. To solve it, a GPU, CPU, or powerful processor is usually used. The process of data conversion takes place through the interface of a program specially designed for cryptocurrency mining. To solve a certain block in order to receive a reward for it, it is necessary to calculate many combinations to select the best possible block. This process is very complicated and time-consuming, because theoretically, the chances that a hash will have the required number of zeros are close to zero. Of course, effective problem solving requires rather powerful hardware: the more powerful and productive the “miner” is, the higher the chances of success. As for the profitability of the SHA-256 algorithm, on average, SHA-256 10 MH/s ($1) yields about 0.000008 BTC (bitcoin). Accordingly, $100 per 1 TH/s will bring a revenue of 0.0008 BTC. In turn, this figure leaves about $950 at a daily production of $0.76 (let’s not forget about electricity, which will “eat” at least half of the daily income). Accordingly, with an investment of $100, the payback will occur in approximately 100/0.34=294 days. The SHA-256 algorithm is currently being successfully implemented on most existing asic miners. Among them is one of the most popular and productive miners in the world, Antminer S3+ from the world-famous Bitmain.

Scrypt mining – from simple to complex

This algorithm began to emerge almost simultaneously with the previous one, when it became clear that the simplicity of SHA-256 running on the CPU did not allow to maximize the potential of devices created for cryptocurrency mining. In fact, Scrypt mining is not much different from SHA mining: the device processes blocks of information, and the output is a ready-made hash. However, the computations have a much more complex structure. By the way, the Scrypt algorithm “clogs” much more RAM (this happens because the algorithm uses it as a place to store random bit sequences). The complexity of mining devices combined with a rather long computing process has led to the fact that the equipment used for cryptocurrency mining has not become more efficient than that which uses CPUs and GPUs. It is worth noting that for efficient cryptocurrency mining, Scrypt miners must have a significant amount of RAM and a very powerful video card (they are most suitable for mining litecoins). As for profitability: 10MH/s currently cost about $66. The daily income will be about 0.000345 BTC (about $0.32). Taking into account the electricity costs, the net profit will be $0.22 per day and the whole venture will pay off in 66/0.22 = 300 days. The powerful A4 Dominator from INNOSILICON can effectively cope with the task of cryptocurrency mining using the Scrypt algorithm.