Cryptocurrency mining is the process of validating transactions on the blockchain and involves solving mathematical equations and rewarding your work. Several virtual coins have varying degrees of complexity in solving mathematical functions. This defines which devices are suitable for the extraction of specific coins.
In this post, we will discuss three types of hardware in cryptocurrency mining operations as well as popular hash algorithms used in the Bitcoin and Ethereum blockchains.
Cryptocurrency encryption using the central processing unit (CPU) of the computer
Incredibly, in its first days after birth, Bitcoin could be extracted using standard personal computers. However, the complexity of the extraction of Bitcoin and other important cryptos has increased, making the processing power of personal computers insufficient. However, a small list of coins like Monero is still compatible with CPU mining.
Extraction of cryptocurrency using a graphic processing unit (GPU)
GPUs are part of a computer system that manages the display functions by managing the rendering process of the graphics. GPUs are vital in computer systems that use heavy video editing tools or users are heavy players. They are also needed on computers used in creating animations.
The use of a graphics processing system moves the workload away from the main processor of the computer and ensures a smooth operation of the system.
So, how do you insert a graphics processor in the cryptocurrency mining field?
Generally, GPUs are efficient in display functions because they have a higher processing speed than normal computer CPUs. In addition, GPUs are designed to perform repetitive and almost predictable functions.
The high processing speeds and design make them suitable for the extraction of cryptocurrencies that requires speed and hardware specially designed to perform the same type of functions over and over again. The arithmetic logic units used by the GPUs can handle multiple mathematical calculations.
However, not all cryptocurrency mining activities can be managed by GPUs. Others need more power to be able to solve complex mathematical calculations.
Cryptocurrency extraction using application-specific integrated circuits (ASICs)
ASICs are the industry-leading hardware equipment used in cryptocurrency mining. ASICs are hardware devices (thought of as a small computer) designed to interact with specific processes.
These devices are used to extract the main coins as they have a higher processing speed than the GPUs. ASICs are designed to interact with a single hash algorithm (later on hashing algorithms). When you extract coins with different hash algorithms, you need to purchase a separate ASIC device for each coin.
With current cryptocurrency mining activities, devices with a high processing speed, such as ASICs, are needed to break down complex mathematical functions and make a profit. Slow cryptocurrency mining devices result in losses as they can not validate transactions on the blockchain as quickly as possible. Even with their slow nature they still consume electricity.
Such high-powered devices are left to those who can afford them, both as a company and as a mining pool. This brings the problem of centralization because the higher the speed of your device, the more likely you are to validate multiple transactions and the greater your reward is.
Even with the power of ASICs, there are cryptocurrencies that can not be extracted because they are generally resistant to ASICs. These coins use a different or even not-so-popular hash algorithm and a different consent algorithm. Generally, ASICs are efficient on blockchain platforms that have implemented a Proof-of-Work algorithm and a SHA-256 hash algorithm
Hash algorithms used in the Bitcoin and Ethereum blockchains
Hash algorithms have the same use in both blockchain and external context. they are used as digital signature and authentication purposes.
SHA-256 Bitcoin hash algorithm
The most common hash algorithm is the SHA-256 algorithm. Secure Hash Algorithm (SHA-256) generates a unique 32-byte signature for any text string. With this algorithm, any input will have 256-bit output. A blockchain that uses the SHA-256 algorithm will take up to ten minutes before a transaction is validated and added to the chain. This algorithm is used by cryptocurrencies like Devcoin, Bitcoin Cash and Bitcoin. ASICs are built around this algorithm.
SHA3 Algorithm of hash etereum
SHA-3 (Secure Hash Algorithm 3) is another version of the Bitcoin SHA-256 hash algorithm. The algorithm is resistant to ASIC devices. In a broader perspective, the SHA-3 uses a "sponge" to absorb the data that are then "squeezed".
Examples of other hash algorithms used in blockchain include Scrypt Algorithm used by Litecoin, Dogecoin, etc. Scrypt is simpler than SHA-256. The X11 algorithm used by Dash Coin and the Cryptonight algorithm used by Monero.
Cryptocurrency mining has evolved and more specific peripherals have been produced to accommodate different hashing algorithms.