Glossary
Algorithm
15/04/2026
In cryptocurrency mining, an algorithm (or mining algorithm) is the cryptographic function that defines the computational puzzle miners must solve to produce a valid block. Each blockchain specifies its own algorithm, and this choice directly determines which hardware mines it most efficiently.
How a mining algorithm works
- Miners take a block of pending transactions and combine it with a random number called a nonce
- They run this data through the algorithm to produce a hash — a fixed-length output string
- If the hash meets the network's current difficulty target, the block is valid and the miner earns the block reward
- If not, miners change the nonce and try again — a modern ASIC does this billions of times per second
Common mining algorithms
| Algorithm | Coins | Best hardware |
|---|---|---|
| SHA-256 | Bitcoin (BTC), Bitcoin Cash (BCH) | ASIC |
| Scrypt | Litecoin (LTC) | ASIC |
| kHeavyHash | Kaspa (KAS) | ASIC |
| Blake3 | Alephium (ALPH) | GPU, ASIC |
| RandomX | Monero (XMR) | CPU |
| Autolykos2 | Ergo (ERG) | GPU |
| KawPow | Ravencoin (RVN) | GPU |
| FishHash | IronFish (IRON) | GPU |
Why the algorithm matters
- Hardware compatibility — ASICs are manufactured for a specific algorithm and cannot be repurposed for others
- Decentralization — CPU-friendly algorithms like RandomX are designed to resist ASIC dominance
- Profitability — algorithm difficulty adjusts automatically as miners join or leave the network
- Algorithm upgrades — some projects change their algorithm via a hard fork to invalidate existing ASICs
