In-depth Analysis of Crypto Mining Algorithms: The "Digital Gold Rush" Code from Bitcoin to Dogecoin

Original Title: "A Detailed Explanation of Cryptocurrency Mining Algorithms: The 'Digital Gold Rush' Codes from Bitcoin to Dogecoin"

Original Source: Dr. Chai Talks Crypto

Today, we will delve into the "core engine" of mining—the mining algorithm. What is a mining algorithm? Why are the mining methods of bitcoin, dogecoin, and litecoin so different? How should beginners choose the right algorithm for mining? This article will unlock the codes of this "digital gold rush" in simple language, taking you from zero into the world of algorithms!

01 What is a Mining Algorithm? The "Mathematical Code" of Blockchain

The mining algorithm is the core rule of cryptocurrency networks, a set of complex mathematical instructions that guide miners to verify transactions, generate new blocks, and maintain blockchain security. Simply put, it is like a "super math problem" that requires computing power to solve, and miners who solve it successfully can earn cryptocurrency rewards (such as bitcoin, dogecoin).

>  A Life Analogy

Imagine the mining algorithm as a lock, and the miner’s hardware as the key. Bitcoin’s lock (the cryptographic hash algorithm SHA-256) requires a super powerful dedicated key (ASIC miner). Different algorithms determine what tools you need, how much it costs, and how much "gold" you can earn.

>  Core Applications of Algorithms

· Transaction verification: Ensures every transaction is legitimate and prevents double spending (spending the same money twice).

· Block generation: Packages transactions into blocks and adds them to the blockchain ledger.

· Reward mechanism: Miners who solve the problem successfully receive new coins and transaction fees.

· Network security: The complexity of the algorithm makes attacking the network extremely costly, ensuring decentralization.

02 Why Are There Different Mining Algorithms?

Since the birth of bitcoin in 2009, cryptocurrency has developed rapidly, giving rise to a variety of mining algorithms. Why are there so many algorithms? There are three main reasons:

· Hardware compatibility: Different algorithms have different hardware requirements. For example, SHA-256 is suitable for ASIC miners, while Scrypt and Ethash are more suitable for GPU or CPU, lowering the threshold for ordinary people to participate.

· Decentralization and security: Algorithm design affects the concentration of computing power. ASIC-resistant algorithms (such as Scrypt) encourage more people to participate and prevent a few large mining farms from monopolizing the network.

· Project uniqueness: New algorithms can help projects stand out. For example, the Scrypt algorithm of dogecoin and litecoin improves network security through merged mining, attracting more miners.

03 Analysis of Mainstream Mining Algorithms: Bitcoin, Dogecoin, etc.

Currently, cryptocurrencies use a variety of mining algorithms, each with unique hardware requirements and mining experiences. Here are four common algorithms, focusing on bitcoin’s SHA-256, dogecoin/litecoin’s Scrypt, and briefly describing other algorithms.

1 SHA-256: Bitcoin’s "Super Challenge"

>  Introduction

SHA-256 (Secure Hash Algorithm 256-bit) is the proof-of-work (PoW) algorithm used by bitcoin, designed by the US National Security Agency (NSA). It requires miners to compute a 256-bit hash value and find a result that meets the difficulty requirement (starting with multiple zeros).

>  Features

· High computing power requirement: In 2025, the total network hash rate is about 859.01EH/s (85.9 billion billion hashes per second).

· Dedicated hardware: Requires ASIC miners (devices specifically designed for SHA-256).

· Block time: About 10 minutes

>  Applicable Coins

· Bitcoin (BTC)

· Bitcoin Cash (BCH)

>  Pros and Cons

· Pros: Extremely high security, huge attack cost; bitcoin has high market recognition and relatively stable long-term value.

· Cons: ASIC miners are expensive, and energy consumption is high.

>  Suitable For

Large professional miners or large mining farms with cheap electricity.

2 Scrypt: The "Beginner-Friendly" Algorithm of Dogecoin and Litecoin

>  Introduction

Scrypt is a memory-intensive algorithm originally designed to resist ASICs. It requires a large amount of memory to perform hash calculations, reducing reliance on pure computing power.

>  Features

· High memory requirement: Compared to SHA-256, Scrypt relies more on memory than pure computing power.

· Fast block time: Litecoin about 2.5 minutes, dogecoin about 1 minute.

· Merged mining: Dogecoin can be mined simultaneously with litecoin, increasing profits.

>  Applicable Coins

· Litecoin (LTC)

· Dogecoin (DOGE)

>  Pros and Cons

· Pros: Low threshold, GPU can participate; fast block generation, frequent rewards; merged mining increases returns.

· Cons: ASICs are gradually entering Scrypt mining, GPU competitiveness is declining; coin price is volatile.

>  Suitable For

Beginners with limited budget, or players who want to try dogecoin/litecoin.

3 Ethash: Ethereum Classic’s "GPU Paradise"

>  Introduction

Ethash is the PoW algorithm used by Ethereum Classic (ETC), designed to be memory-intensive and ASIC-resistant, requiring hashing of a dynamic dataset (DAG, about 6GB).

>  Features

· Memory dependence: DAG size increases over time, about 6-8GB in 2025.

· Hardware: GPU is mainstream, ASIC efficiency is low.

· Block time: About 15 seconds.

>  Applicable Coins

Ethereum Classic (ETC)

>  Pros and Cons

· Pros: ASIC-resistant, suitable for GPU mining; high degree of decentralization.

· Cons: Lower rewards, requires high-performance GPU; DAG growth increases hardware requirements.

>  Suitable For

Players with high-performance graphics cards who want to try non-bitcoin mining.

4 Brief Introduction to Other Algorithms

· Equihash (Zcash): Memory-intensive, ASIC-resistant, suitable for GPU mining, focuses on privacy protection.

· RandomX (Monero): CPU-friendly, ASIC-resistant, encourages participation by ordinary computers, maintains decentralization.

· X11 (Dash): Combines 11 hash functions, energy-efficient and secure, supports GPU and dedicated ASICs.

Chart: Comparison of Mainstream Mining Algorithms

Note: Hardware requirements and block times may vary slightly due to network dynamics. Litecoin and Dash used GPU mining in their early stages but were eventually replaced by ASICs, making GPUs basically uncompetitive.

04 Future Trends of Mining Algorithms

The evolution of mining algorithms is not only driven by technological advances, but also by energy costs, environmental policies, and the concept of decentralization. Against the backdrop of accelerated global computing power deployment, chip manufacturing technology iteration, and blockchain ecosystem diversification, future mining algorithm trends may show the following directions:

>  More Efficient Algorithms and Hardware Adaptation

As chip manufacturing enters the 3nm or even 2nm process era, future mining algorithms will focus more on matching hardware performance and energy efficiency. New algorithms may reduce redundant calculations without compromising security, improve hash output per watt, extend hardware life cycles, and reduce equipment depreciation pressure.

>  ASIC-Resistant Design and Optimization of Hashrate Distribution

To prevent computing power from being overly concentrated in large mining farms, more projects may adopt CPU- or GPU-friendly algorithms. For example, Monero’s RandomX algorithm can fully utilize the cache and instruction set of general-purpose processors, making ASIC advantages almost disappear.

In the future, dynamic algorithms may also emerge (such as regularly adjusting hash functions or memory requirements) to suppress the economic feasibility of ASIC development, allowing individual miners to participate for longer periods.

>  Green Mining and Carbon Neutrality Goals

In 2024, about 54% of bitcoin’s global computing power already uses renewable energy (data source: Bitcoin Mining Council), but energy consumption is still criticized by the public.

New algorithms may be better adapted to intermittent energy sources (such as wind and solar), and combined with intelligent scheduling systems, can automatically increase computing power when renewable energy is abundant and reduce load during low periods, thereby reducing carbon footprint and lowering electricity costs.

>  Balance Between PoW and PoS

Ethereum completed the "Merge" in September 2022 and switched to PoS, reducing annual electricity consumption by more than 99.95%, which has attracted the attention of some projects to PoS.

However, PoW still has unique advantages in security, trustlessness, and censorship resistance, so hybrid consensus models (such as PoW+PoS or PoW+PoA) may emerge in the future to balance decentralization and energy efficiency.

05 Choosing the Right "Digital Gold Rush" Code

The mining algorithm is the "mathematical code" of the cryptocurrency world, determining the threshold, cost, and rewards of mining. Different algorithms have different requirements for computing power, energy consumption, and hardware performance, thus affecting mining profitability.

The SHA-256 algorithm used by bitcoin attracts professional miners with high security and high returns, but requires expensive ASIC miners and low electricity prices, making the threshold high for small and medium miners. The Scrypt algorithm of dogecoin and litecoin provides beginners with a low-threshold "gold rush" opportunity, allowing them to get started with just a GPU. Algorithms such as Ethash and RandomX are specifically designed to resist ASICs, helping to attract more participants and promote decentralization.

Whether you are tackling bitcoin’s "super challenge" or testing the "meme wealth" of dogecoin, understanding mining algorithms is the first step to success.