# Crypto mining algorithms explained

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Content:

- Cryptocurrency Hashing Algorithms Explained
- Blockchain Competition Between Miners: A Game Theoretic Perspective
- Definition of 'Data Mining'
- How Does Bitcoin Mining Work?
- How to make cryptocurrency more sustainable
- A multimillion-dollar criminal crypto-mining ecosystem has been uncovered
- Explained: What happens when all 21 million bitcoins are mined
- Blockchain and Cryptocurrency Explained

**WATCH RELATED VIDEO: How does a blockchain work - Simply Explained**

## Cryptocurrency Hashing Algorithms Explained

I decided to see how practical it would be to mine Bitcoin with pencil and paper. It turns out that the SHA algorithm used for mining is pretty simple and can in fact be done by hand. Not surprisingly, the process is extremely slow compared to hardware mining and is entirely impractical. But performing the algorithm manually is a good way to understand exactly how it works. Bitcoin mining is a key part of the security of the Bitcoin system.

The idea is that Bitcoin miners group a bunch of Bitcoin transactions into a block, then repeatedly perform a cryptographic operation called hashing zillions of times until someone finds a special extremely rare hash value. At this point, the block has been mined and becomes part of the Bitcoin block chain.

The hashing task itself doesn't accomplish anything useful in itself, but because finding a successful block is so difficult, it ensures that no individual has the resources to take over the Bitcoin system. For more details on mining, see my Bitcoin mining article. A cryptographic hash function takes a block of input data and creates a smaller, unpredictable output. The hash function is designed so there's no "short cut" to get the desired output—you just have to keep hashing blocks until you find one by brute force that works.

For Bitcoin, the hash function is a function called SHA In Bitcoin, a successful hash is one that starts with enough zeros. But Bitcoin is exponentially harder.

Currently, a successful hash must start with approximately 17 zeros, so only one out of 1. In other words, finding a successful hash is harder than finding a particular grain of sand out of all the grains of sand on Earth. These l'il guys will fix your internet Designed to work in concert to bring you a seamless network experience across your whole home, up to 4, square feet.

The following diagram shows a block in the Bitcoin blockchain along with its hash. The yellow bytes are hashed to generate the block hash. In this case, the resulting hash starts with enough zeros so mining was successful. However, the hash will almost always be unsuccessful. In that case, the miner changes the nonce value or other block contents and tries again. The SHA hash algorithm takes input blocks of bits i. The SHA algorithm consists of a relatively simple round repeated 64 times. The diagram below shows one round, which takes eight 4-byte inputs—A through H—then performs a few operations, and generates new values of A through H.

One round of the SHA algorithm showing the 8 input blocks A-H, the processing steps, and the new blocks. The blue boxes mix up the values in non-linear ways that are hard to analyze cryptographically. Since the algorithm uses several different functions, discovering an attack is harder.

If you could figure out a mathematical shortcut to generate successful hashes, you could take over Bitcoin mining. The Ma majority box looks at the bits of A, B, and C. For each position, if the majority of the bits are 0, it outputs 0. Otherwise it outputs 1. That is, for each position in A, B, and C, look at the number of 1 bits.

If it is zero or one, output 0. If it is two or three, output 1. In other words, if the number of 1 bits is odd, the sum is 1; otherwise, it is 0. The three values in the sum are A rotated right by 2 bits, 13 bits, and 22 bits. The Ch "choose" box chooses output bits based on the value of input E. If a bit of E is 1, the output bit is the corresponding bit of F. If a bit of E is 0, the output bit is the corresponding bit of G. In this way, the bits of F and G are shuffled together based on the value of E.

The red boxes perform bit addition, generating new values for A and E. The input W t is based on the input data, slightly processed. This is where the input block gets fed into the algorithm. The input K t is a constant defined for each round. As can be seen from the diagram above, only A and E are changed in a round.

The other values pass through unchanged, with the old A value becoming the new B value, the old B value becoming the new C value and so forth. Although each round of SHA doesn't change the data much, after 64 rounds the input data will be completely scrambled. The video below shows how the SHA hashing steps described above can be performed with pencil and paper. I perform the first round of hashing to mine a block. Completing this round took me 16 minutes, 45 seconds.

To explain what's on the paper: I've written each block A through H in hex on a separate row and put the binary value below. In the lower right, a bunch of terms are added together, corresponding to the first three red sum boxes. In the upper right, this sum is used to generate the new A value, and in the middle right, this sum is used to generate the new E value. These steps all correspond to the diagram and discussion above.

I also manually performed another hash round, the last round to finish hashing the Bitcoin block. In the image below, the hash result is highlighted in yellow.

The zeroes in this hash show that it is a successful hash. Note that the zeroes are at the end of the hash. The reason is that Bitcoin inconveniently reverses all the bytes generated by SHA Last pencil-and-paper round of SHA, showing a successfully-mined Bitcoin block.

Each step of SHA is very easy to implement in digital logic—simple Boolean operations and bit addition. If you've studied electronics, you can probably visualize the circuits already. For this reaon, custom ASIC chips can implement the SHA algorithm very efficiently in hardware, putting hundreds of rounds on a chip in parallel.

Image from Zeptobars. CC BY 3. In contrast, Litecoin, Dogecoin, and similar altcoins use the scrypt hash algorithm, which is intentionally designed to be difficult to implement in hardware. It stores different hash values into memory, and then combines them in unpredictable ways to get the final result. As a result, much more circuitry and memory is required for scrypt than for SHA hashes.

You can see the impact by looking at mining hardware , which is thousands of times slower for scrypt Litecoin, etc than for SHA Bitcoin. The SHA algorithm is surprisingly simple, easy enough to do by hand. The elliptic curve algorithm for signing Bitcoin transactions would be very painful to do by hand since it has lots of multiplication of byte integers. Doing one round of SHA by hand took me 16 minutes, 45 seconds.

At this rate, hashing a full Bitcoin block rounds [3] would take 1. In comparison, current Bitcoin mining hardware does several terahashes per second, about a quintillion times faster than my manual hashing. Needless to say, manual Bitcoin mining is not at all practical. A Reddit reader asked about my energy consumption. The next question is the energy cost. Thus my energy cost per hash is about 67 quadrillion times that of mining hardware.

It's clear I'm not going to make my fortune off manual mining, and I haven't even included the cost of all the paper and pencils I'll need. To be precise, the hash must be less than a particular value that depends on the current Bitcoin difficulty level. The NSA designed the SHA algorithm and picked the values for these constants, so how do you know they didn't pick special values that let them break the hash?

To avoid suspicion, the initial hash values come from the square roots of the first 8 primes, and the K t values come from the cube roots of the first 64 primes.

Since these constants come from a simple formula, you can trust that the NSA didn't do anything shady at least with the constants. Thus, a second set of 64 SHA hash rounds is required on the second half of the Bitcoin block. Adding this up, hashing an arbitrary Bitcoin block takes rounds in total. However there is a shortcut. Mining involves hashing the same block over and over, just changing the nonce which appears in the second half of the block. Thus, mining can reuse the result of hashing the first bits, and hashing a Bitcoin block typically only requires rounds.

I started the hashing process with a block that had already been successfully mined. In particular I used the one displayed earlier in this article,. This post first appeared on Ken Shirriff's blog and is republished here with permission.

Ken Shirriff is a software engineer who blogs about chargers, old integrated circuits, and Bitcoin in his spare time. The A. About Gizmodo Advisor Gizmodo Store. By Ken Shirriff.

## Blockchain Competition Between Miners: A Game Theoretic Perspective

At any particular moment, thousands of computers around the world are humming away, crunching complex math problems that create and sustain bitcoin. This network gives bitcoin its appeal: decentralized, always on and easily tradeable. But it also means the network is constantly using energy — a sticking point for many of the cryptocurrency's skeptics and critics. And it's not just a bitcoin problem. Other cryptocurrencies and blockchains including Ethereum have similar challenges. The debate about bitcoin's environmental impact was elevated earlier this month when Tesla CEO Elon Musk , once one of the most notable bitcoin boosters, said his company would no longer accept it for the purchase of vehicles.

## Definition of 'Data Mining'

At its peak, cryptocurrency mining was an arms race that led to increased demand for graphics processing units GPUs. Despite the increased demand for GPUs, thecrypto mining gold rush quickly came to an end, as the difficulty of mining top cryptocurrencies like Bitcoin increased just as quickly. Mining cryptocurrencies, however, can still be profitable. So, what is crypto mining, is it legal, and how can you get started? This article takes a closer look at these questions. Most people think of crypto mining simply as a way of creating new coins. Crypto mining, however, also involves validating cryptocurrency transactions on a blockchain network and adding them to a distributed ledger. Most importantly, crypto mining prevents the double-spending of digital currency on a distributed network. Like physical currencies, when one member spends cryptocurrency, the digital ledger must be updatedby debiting one account and crediting the other. However, the challenge of a digital currency is that digital platforms are easily manipulated.

## How Does Bitcoin Mining Work?

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## How to make cryptocurrency more sustainable

Bitcoin Basics. How to Store Bitcoin. Bitcoin Mining. Key Highlights. Cryptography is a field of math which encompasses a variety of different methods for maintaining digital security and privacy.

## A multimillion-dollar criminal crypto-mining ecosystem has been uncovered

Help us translate the latest version. To better understand this page, we recommend you first read up on transactions , blocks and proof-of-work. Mining is the process of creating a block of transactions to be added to the Ethereum blockchain. Ethereum, like Bitcoin, currently uses a proof-of-work PoW consensus mechanism. Mining is the lifeblood of proof-of-work.

## Explained: What happens when all 21 million bitcoins are mined

Cryptocurrencies have become magnets for illicit activities such as theft and fraud. But one of less-reported crimes is the use of stolen processing power to mine currencies such as Bitcoin and Monero. The proceeds of this theft can then be exchanged for real currency, reaping vast rewards for malicious actors.

## Blockchain and Cryptocurrency Explained

**RELATED VIDEO: What is Bitcoin Mining? (In Plain English)**

February 14, By Andrew Lyle. A new algorithm developed by U of A computing scientists could reduce the time and energy it takes to perform the complex computations involved in mining Bitcoin. Photo: Getty Images. A new algorithm by computing scientists at the University of Alberta could be the first step in reducing the massive amounts of energy and computing power it takes to mine cryptocurrencies like Bitcoin. Chowdhury explained that the electrical power needed to perform the computation has a massive carbon footprint-a growing concern for the Bitcoin mining industry. The researchers' new technique takes on a computational problem known as the Boolean satisfiability SAT problem, which is well known in computing science and has applications in hardware design, software testing and encryption-and Bitcoin mining.

Bitcoin mining is the process by which new bitcoins are entered into circulation. It is also the way the network confirms new transactions and is a critical component of the blockchain ledger's maintenance and development. The first computer to find the solution to the problem receives the next block of bitcoins and the process begins again. Cryptocurrency mining is painstaking, costly, and only sporadically rewarding. Nonetheless, mining has a magnetic appeal for many investors who are interested in cryptocurrency because of the fact that miners receive rewards for their work with crypto tokens. This may be because entrepreneurial types see mining as pennies from heaven, like California gold prospectors in

If you have been reading my articles, you know that I like to go straight to the point. Still, this article is pretty long to please bear with me! Mining is the method that is used in the blockchain to group transactions into a block, append this block to the blockchain and broadcast the new block to the network. Mining ensures the consensus mechanism is maintained and keeps the blockchain decentralized.

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