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Scrypt Mining or Bitcoin

Mining: The Ultimate


Guide for Miners
Posted on November 18, 2014 by Steven Nekhaila 4 Comments

One of the central pillars of any cryptocurrency is the hashing


algorithm it is based upon, but what makes these algorithms
important, and what are the differences between each algorithm? If
you are looking to start mining a cryptocurrency, these are
important questions to consider. You may be asking yourself, who
chooses the algorithm for a cryptocurrency? The chosen algorithm
is up to the coins development team, not the miner; there are many
reasons why the chosen algorithm was implemented, ranging from
long term goals, to network security, and even protection from ASIC
mining hardware. It is important for miners to consider the algorithm
of a coin they are willing to mine for several reasons, including the
electricity required to mine, the effectiveness of their existing
hardware on the network, and whether or not they wish to mine with
GPU, CPU or ASIC based mining equipment.

SHA-256, Scrypt, Scrypt-ChaCha or


X11: Which Mining Algorithm is the
Best?
What is so important about the hashing algorithm you may ask, and

why is it necessary to have choices? The most popular algorithm


was the one which started it all, SHA-256, which originally debuted
as Bitcoins hashing algorithm. With the introduction of Litecoin,
Scrypt entered the scene and came with its own set of pros and
cons, but is by far one of the most popular algorithms in existence.
Since then, many other algorithms have taken stage on the
cryptocurrency scene, including the likes of X11, X12, X13, ScryptN, Scrypt-ChaCha, Groestl, Keccak, NIST5 and many others. What
makes each hashing algorithm unique is often most important to the
coin developer, for instance, SHA-256 based coins have a block
time of around 8-10 minutes, whereas Scrypt coins can have block
times as low as 30 seconds! Security also comes to mind when
choosing an algorithm for a new coin; longer block times can make
the network more secure especially with low network hash.
Introducing a new coin to an algorithm which has ASICs available
on the market can wreak havoc if they cant protect themselves
against the dreaded 51% attack. Even strategically choosing an
algorithm to attract disenfranchised GPU miners from an ASIC
ridden market or integrating developments from other coins with the
same algorithm can also influence decision making.
Acryptocurrency may even be based on the fact that it is ASIC
resistant and may need to change algorithms in order keep that
promise. All in large, choices are important when developing a coin
and can mean a lot for the purpose and specific mission of that
coin.

Bitcoin Mining with ASICs. Photo Credit: Mirko Tobias Schaefer CC BY 2.0

You may be thinking to yourself, well, developers having choices in


which algorithm they choose to implement in a coin is great and all,
but how does that affect ME, the miner? That is a valid question,
and a very important one to consider as well. Mining a
cryptocurrency with a specific algorithm can influence the hardware
you use, to your electricity cost, the process it takes to setup your
mining equipment and the philosophy you prefer as a part of the
mining process. We will be covering the most popular and up and
coming algorithms to date, what makes each one unique and what
the pros and cons are of mining each algorithm, thus you, the
miner can make an informed decision on the algorithm which suits
you.

SHA-256
The dawn of cryptocurrency began with Bitcoin, and in its wake
came SHA-256 integrated for Bitcoin mining. SHA stands for
Secure Hashing Algorithm and is a part of the SHA-2 family of
hashing algorithms. SHA-2 is the predecessor of SHA-1 which is
now considered insecure and obsolete. SHA-256 is considered to
be one of the most secure cryptographic algorithms in existence
and is the security standard in many intelligence agencies around
the world. The algorithm family itself was created by the United
States National Security Agency (NSA), and is released royalty free

under U.S. patent 6829355, it features several different variations


including SHA-256, SHA-384 and SHA-512. The white paper was
officially released to the public by the National Institute of Standards
and Technology (NIST) and was intended to be used as a Federal
Information Processing Standard (FIPS), which means it was
released as standard for all non-military government agencies as
well government contractors. It is no wonder why Satoshi Nakamoto
chose SHA-256 as the algorithm he would implement into Bitcoin.
When Bitcoin was first released, it was possible for Satoshi
Nakamoto to mine over 2,000 BTC on his CPU alone, what has
changed since then? At one point it was possible to mine Bitcoin on
a simple set of hardware, a laptop CPU would be all you needed to
mine, and miners were at a logical standstill. Do they continue
mining Bitcoin at a loss due to electricity cost with the hopes of
Bitcoins price increasing in the future, or do they buy off of the open
market for roughly the same cost to mine? Looking back you may
think your investment would be better off spent on a time machine
to convince your past self that your computers spare processing
power would be better off spent mining Bitcoins than playing
solitaire, however, this is a perfect example of the economics and
decisions that miners make while deciding to mine a coin and a
segway into the SHA-256 arms race.

Yes, we can cool down USB Bitcoin Miners! Photo Credit: brownpau CC BY 2.0

At the time, miners were becoming less and less likely to sell their
coins at a loss, as demand increased along with the difficulty level
of mining, the market took an upwards trend in direction. As more
and more miners entered the network, Bitcoins difficulty
automatically increased to keep the block time consistent, this made
mining harder. What happened next would change the SHA-256
algorithm forever ASIC miners were developed. ASICs could
mine Bitcoin hundreds of times faster than GPUs and CPUs, using
only a fraction of the electricity at much less of the cost than a
competing GPU or CPU rig, with the added benefit of less heat and
noise output within a smaller physical footprint, ASICs completely
took over the market.
As ASICs began to flood the market, hobbyists and tinkerers that
reaped the benefit of being early adopters were completely pushed
out of the market. As ASIC companies competed for the best
kilowatt to hash ratio, with smaller footprints, less noise, less heat,
and the lowest price, investors poured money into this new, very
lucrative industry, and thus the Bitcoin arms race began. To mine a
SHA-256 coin, GPU and CPU mining is not advised, the hash
power of GPU and CPU rigs is too insignificant to make a profitable
impact. SHA-256 is also very power hungry, thus any returns would
most likely be close to nothing or even in the red with no
foreseeable return on investment. The most profitable, cost-efficient

way to mine SHA-256 coins is with ASIC computers, bar none.


Although ASICs succeeded in pushing smaller miners out of the
SHA-256 algorithm, these miners do provide a number of
advantages to the network of each SHA-256 coin. In one example,
ASIC miners do protect the network from attackers by providing
sufficient hash rates as to protect coins from GPU and CPU
attackers, bot-nets, and even super computers and governments.
The sheer amount of decentralized hash power can immensely help
a coin grow quickly, securely, and provides what is known as the
network effect, which entrenches a coins position as an accepted
currency even though it may come under competition by other more
superior coins. The large amount of hash on the network even
protects a coin from governments and institutions or even attackers
that wished to take over the network in a 51% attack, this is thanks
to the immense amount of hash power being put on the network.

Bitcoin Mining with RaspberryPi at 8GH/s and 42 watts. Photo Credit: Dennis Yang
CC BY 2.0

Mining SHA-256 coins is a great option only if you are interested in


investing in ASICs, which can range from tens of dollars, to several
hundred, to several thousand depending on the profitability desired.
SHA-256 ASIC miners come from a large and developed industry,
thus finding a reputable manufacturer is very easy to do. With ASIC
mining comes the added bonus of manufacturer support, which is

not offered to GPU or CPU miners if they need help. Depending on


the specific ASIC miner, hardware is constantly becoming more
energy efficient with less noise and less heat output than GPU
mining SHA-256, however dont consider putting these miners in
your bedroom just yet if you want your significant other to sleep in
the same room with you, they are still loud and hot. ASICs are also
notoriously easy to setup, with minimal technical knowledge
required as less configuration and almost no system building is
needed. Just remember, if you are in the GPU or CPU game, use
your miners elsewhere, SHA-256 is not the algorithm for you! Which
leads us to our next algorithm

Scrypt Mining
Scrypt was first introduced in cryptocurrency mining with the
introduction of Litecoin. Benefits of the Scrypt algorithm included
lower block times than Bitcoin, and ASIC resistance. Ironically,
Scrypt was implemented as a solution to Bitcoins GPU mining,
which was seen as too centralized for Litecoins developers, thus
Scrypt was implemented to prevent Litecoin from being mined using
GPUs. For whatever reason, Scrypt never achieved that goal and
GPU miners flooded the network in any case. Scrypt was originally
invented by Colin Percival for the Tarsnap online backup service,
the service touts that Scrypt makes it tremendously expensive for
custom hardware attacks to be conducted and is thousands of times
more secure than many popular cryptographic algorithms in use

today. Scrypt requires attackers to either use more memory to


conduct a brute force attack, or use less memory and conduct a
slower attack, this trade off is intentional and makes Scrypt very
secure. It is no wonder it was first implemented by Litecoin creator
Charlie Lee as the coins algorithm.
For miners, Scrypt is GPU friendly and the vast majority of Scrypt
miners are GPU miners. Scrypt takes up more memory than SHA256, however this is offset by the fact that Scrypt mining uses up
less electricity than SHA-256 mining. With less electricity comes
lower heat output and less noise coming from your miners, however
mining Scrypt can still increase your AC bills during the Summer,
and lower your gas bills in the Winter. It needs to be noted that
ASICs for Scrypt mining are on the market, thus if you are a GPU
miner mining Scrypt, you may be in for some competition. As more
and more Scrypt ASICs are expected to hit the market, expect the
difficulty to rise on Scrypt coins and your market shares to
decrease, along with your profits. Scrypt coins are currently still
profitable and can be an excellent investment if you have the
equipment, however if you are interested in mining Scrypt you may
want to consider investing in an ASIC miner instead. Some ASICs
can even mine SHA-256 and Scrypt simultaneously, so consider
ASICs as an option if you are considering mining a Scrypt coin.

Mining Litecoins for a handful of dollars a day. Photo Credit: Mirko Tobias Schaefer

CC BY 2.0

For many miners, you may feel disenfranchised by the inevitable


onslaught of ASICs, perhaps you have already invested a
substantial amount in GPUs and want to put them to use, perhaps
you have ASICs but you have a few spare GPU rigs sitting around,
or perhaps you dont want to be involved in the ASIC arms race and
would rather not have to upgrade your ASICs every few months in
order to stay profitable. For whatever the reason you have decided
to stay away from ASICs, there are developers who have created
algorithms which are ASIC resistant. These ASIC resistant
algorithms ensure decentralization from ASIC computers, and many
philosophize that ASIC resistant algorithms return mining to the
average Joe that doesnt have the money to mine using expensive
specialized computers. ASIC resistant coins are typically a safe
haven from ASICs and allow GPU and CPU miners a place to use
their hash power. One infamous example of an ASIC resistant coin
is Vertcoin, which was built on the philosophy of decentralization
and ASIC resistance, this coin was based on the Scrypt-N
algorithm, a modification of Scrypt that made it difficult to program
ASICs for. However, it was only a matter of time before ASICs
caught up as Scrypt-N ASICs are already on their way to the
market. However there are a few algorithms that have so far stood
the test of time and have yet to be successfully touched by ASIC
developers.

Scrypt-ChaCha
Scrypt-ChaCha continues in the wake of what Scrypt and is closely
related to Scrypt-N, an ASIC resistant algorithm that keeps ASIC
miners from taking up network shares, however ScryptChaChatakes things a step further and implements the original
intentions of Scrypt, which is complete decentralization from ASICs
and the eventual one to one equilibrium between GPUs and CPUs.
The Scrypt-ChaCha algorithm uses what is known as an N-Factor,
which is a number that goes up overtime, this number influences
the amount of RAM required to mine and also makes it easier for
CPUs to mine while subsequently making it harder for GPUs.
Overtime, this makes Scrypt-ChaCha coins more decentralized as
anyone with a CPU can mine. Unlike Scrypt-N which allowed coin
developers to program when the N-Factor changes occur, ScryptChaCha follows a set schedule which adjusts difficulty according to
the algorithm itself. Scrypt-ChaCha based coins are programmed to
go from a complete GPU edge to a one to one equilibrium with
GPUs over the course of many years. Think of Bitcoin mining in
reverse.

Did you already assemble your own Scrypt Mining Machine? Photo Credit: Steven
Nekhaila

Scrypt-ChaCha is still ASIC resistant with no ASICs announced for


the foreseeable future, if you are a GPU or CPU miner, Scrypt-

ChaCha should be considered. If a coin is on a lower N-Factor, it is


more desirable to mine using a GPU, if it is a higher N-Factor,
CPUs become more desirable. As N-Factors increase, more
memory is required by the miner, but consequently less electricity is
also required. This trade-off makes miners less power hungry than
Scrypt, SHA-256 and even X11 depending on the current N-Factor.
This also means less heat output and noise with each N-Factor
increase. Miners will need to reconfigure their mining settings with
each increase as well, however easy to use configuration
generators can give you the new settings within a couple of clicks.
The increasing N-Factor will also require more memory which may
be required by your system. However, be aware of the N-Factor
change schedule for any Scrypt-ChaCha coin, if you are not aware
of an N-Factor change and dont have time to reconfigure, than your
miners will be sitting useless until you do. Luckily, all N-Factor
schedules are the same for Scrypt-ChaCha coins, unlike Scrypt-N
coins, which allow the developer to pick the specific date of the
change, which can be several months or even several years in the
higher N-Factors. However, if adjusting for N-Factors just isnt for
you, then we have one more algorithm that may fit your profile.

X11
The X series of algorithms first debuted with Darkcoin and was
invented by Darkcoins creator, Evan Duffield. X11 is a hashing
algorithm that includes eleven different hashing algorithms bundled

up in one package. The original intent of X11 was to protect the


network from what its creators called, Single Point Failures, which is
a scenario where a hacker could theoretically crack an algorithm,
making it vulnerable to attacks. Unlike SHA-256 and Scrypt, which
are based on a single hashing algorithm, X11 features eleven
different algorithms, all of which would all have to be compromised
for an attack to be successful. Critics claim that SHA-256 and
Scrypt are still extremely secure algorithms, as no one has been
able to crack them, especially with the money behind these
algorithms; even with all of the added attention no obvious flaws
have been found. The X series of algorithms extends beyond X11,
and includes X12, X13, X14 all the way up to X17. The simple
difference between these algorithms is the amount of hashing
algorithms intertwined in the package.
X11 is by far the most popular of the X series of hashing
algorithms and has a number of attractive features to boot. X11 is
best mined using GPUs, and has a 1:6 efficiency ratio between
CPU and GPUs, thanks to better mining software, the GPU/CPU
gap has been widening since the introduction of the algorithm. At
this time X11 remains ASIC resistant and there are no publicly
announced ASICs in development for the algorithm, however its
widespread popularity and profitability may make it a target for ASIC
developers in the future. X11 is also less power hungry then both
SHA-256 and Scrypt, keeping your house cooler and quieter

especially in the summertime, and keeping your significant other


slightly happier about your mining operation. X11 happens to be the
most dependent on the mining software you use compared to any
other algorithm; specific mining software can give you huge
advantages over others, potentially increasing hash power up to
40% with just the right software and settings. X11 is a great choice
if you are a GPU miner who has some time to tinker with your
software with the added bonus of saving money on electricity cost.
X11 is also a great option if you have multiple GPU rigs and dont
want to overload your outlets, and can keep GPU farms cooler and
quieter than SHA-256 and Scrypt.

X11

X12

X13

X14

X15

X17

blake

blake

blake

blake

blake

blake

bmw

bmw

bmw

bmw

bmw

bmw

groestl

groestl

groestl

groestl

groestl

groestl

jh

jh

jh

jh

jh

jh

keccak

keccak

keccak

keccak

keccak

keccak

skein

skein

skein

skein

skein

skein

luffa

luffa

luffa

luffa

luffa

luffa

cubehas

cubeha

cubeha

cubeha

cubeha

cubeha

sh

sh

sh

sh

sh

shavite

shavite

shavite

shavite

shavite

shavite

simd

simd

simd

simd

simd

simd

echo

echo

echo

echo

echo

echo

ocean?

hamsi

hamsi

hamsi

hamsi

fugue

fugue

fugue

fugue

shabal

shabal

shabal

whirlpo

whirlpo

ol

ol
loselos
e
djb2

Source: www.getpimp.org/community/blog/144-what-are-all-these-x11,-x13,x15-algorithms-made-of.html

Conclusion
Well ladies and gentlemen, that essentially wraps up our algorithm
comparison here, I hope that you have found the algorithm you are
looking for, or have learned a little bit more about the algorithm of
the coin you are looking to mine. Navigating the world of
cryptocurrencies can be a bit overwhelming for miners, and there
are many factors to consider when picking the perfect coin to mine
and the chosen algorithm can deeply affect that decision. If you are
an ASIC miner who prefers the big guns, a small time CPU miner
who prefers decentralization, or a GPU hobbyist who enjoys
building your rigs and mining off them too, knowing the pros and
cons of each algorithm can you help you make an informed
decision on what coin to mine. So now all that is left to you is to find
your preferred coin that offers the developments, community and
potential you like, and mine to your hearts content!

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Published by Steven Nekhaila

Businessman, journalist, videographer and activist, Steven Nekhaila


is the Management Director of Ultracoin, and also manages nine
successful family restaurants while aiming to bring a higher level of
professionalism and expertise into the world of crypto. Stevens
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Posted in News Tagged with: Bitcoin, Bitcoin Miner, Cryptocurrency, Mining

Algorithm, Scrypt, Scrypt Mining, Scrypt-ChaCha, SHA-256, X11


4 comments on Scrypt Mining or Bitcoin Mining: The Ultimate Guide

for Miners
.
.

Matthias says:November 18, 2014 at 9:42 pmWorthwhile read! Thank you for
sharing!Reply

.
.

jamesbond007 says:November 20, 2014 at 3:53 pmGreat read, cleared a lot


up for me.Answered lots of questions ThanksReply

.
.

Marc says:November 20, 2014 at 4:19 pmAwesome article!Reply

.
.

John says:December 11, 2014 at 8:04 pm1.there are SHA 256 d coins with
shorter than 8 minute block times. The block time length was
chosen because of networking infrastructure hoohah2. scrypt
mining is NOT profitable with GPUs. dont even try.3. GPU miners
and ASIC miners may live in harmony in what is called a Multi
Proof of Work system. basically there is more than one algo for
mining the same ONE blockchain and each algo shares the work
of verifying transactions and are rewarded in a way that doesnt
unfairly reward those with bigger pockets (re: arms race of miners)
Myriad OR Myriadcoin has been pioneering the way for cryptos to
not suffer from ASIC centralization of mining and therefore coins in
the hands of the masses.@Aantonop gives a tip of the hat to
Myriad in his book, Mastering Bitcoin, (an O Reilly publication) and
I guarantee more and more coins will take the route Myriad has
built into this increasingly of a clusterfuck of a
hobby/idea/currency/money/network/technology/space because of
the positives it brings to the crypto community as a whole.Fire up

those miners and keep minin!Reply

2 Pings/Trackbacks for "Scrypt Mining or Bitcoin Mining: The Ultimate Guide


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Ultracoin Exchange: Yacuna introduces new XBT/UTC market


says:November 20, 2014 at 12:42 pm[] Management Director of
Ultracoin, who already inspired our readers with an in-depth
posting on Scrypt Mining or Bitcoin Mining: The Ultimate Guide for
Miners. Until then, we would love to hear your thoughts on the new
XBT/UTC exchange and encourage you to []

Ultracoin 2.0: Welcome to the future! says:November 21, 2014 at 2:31


pm[]

the few, Ultracoin aims to accomplish just the opposite:

widespread decentralized distribution. The Scrypt-ChaCha


algorithm relies on a continuously increasing N-Factor. As this NFactor increases (based upon an []