Different Mining Algorithms


What are the major types of algorithms used in the cryptocurrency mining process? Pandacoin’s Crypto Crash Course takes a look at SHA-256 and Scrypt, and the differences between them. 

The first cryptocurrency, bitcoin, runs off of an algorithm called Sha-256. More modern coins such as Dogecoin and Pandacoin run off of an algorithm called Scrypt. Very recent coins such as Darkcoin run off of an algorithm called X11. There are a few other algorithms that are slight variations of these main three types that won’t be described here.

Usually, the difference between these algorithms only matter for Proof of Work coins that are being directly mined, because the algorithm only effects how they are mined, and Proof of Stake coins, as described in an earlier section, cannot be directly mined.

Sha-256 and Scrypt behave much the same way as far as most miners are concerned. The numbers may look different when you see how many hashes per second you are producing, but coin production given a certain piece of hardware is usually comparable. The only important difference is that Sha-256 cannot be mined by most scrypt ASICs, and Scrypt cannot be mined by most Sha-256 ASICs.


ASICS are pushing out CPU and GPU ‘regular’ miners out of the market due to their power efficiencies and lower electricity operating costs.

The real “stand-out” here is the X11 algorithm. It is different because, up until this point, there have been no ASICs produced which can mine it. Further, it runs GPUs cooler, and asks for less electricity than Scrypt or Sha-256, making it cheaper to run your mining program, and therefore more profitable! Usually, X11 mining also produces a higher value worth of coins than Scrypt or Sha-256. This may be because of many different factors which may be discussed in a later article.

Again, none of this really matters very much if you’re investing in a Proof of Stake coin that cannot be mined, unless you intend to mine other coins with which you would trade to attain the coin you want, in which case, it may be most profitable to mine some X11 coin, for the higher income and the cooler temperatures, and lower electricity usage.