Jax.Network Blog
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Jax.Network Blog

Our choice of mining hash algorithm

by Iurii Shyshatskyi, Chief Scientist at Jax.Network

A hash function is a parameter that determines what hardware is more efficient for mining. This parameter has a direct effect on who can become a long-term validator in a particular network. Read the article to learn what mining hash algorithm we recommend for merge-mining Bitcoin with our network.

Drawbacks of GPU mining

Initially, we wanted to use a hash function designed for GPU mining. However, after considering all pros and cons, we abandoned this idea. Why?

  1. First of all, hashes designed for GPU mining have somewhat higher requirements for hardware and are less convenient for mobile devices of casual users. GPU-friendly hashes like Ethash and Equihash use a DAG which is built on data from block headers. If Jax.Network reaches the scale of Visa and Mastercard, this type of hashes will increase the cost of servers and data centers operated by big players such as mining pools and exchange agents.
  2. The second big problem of GPU mining is security. Attacking the network through a 51% attack is cheaper if mining equipment has an alternative usage.
  3. The third major problem of GPU mining is the fact it’s already used in numerous altcoins. They compete for the same hashrate pool and this competition has a negative impact on the security of each of them. We believe that attaching Jax.Network to this hash will harm everybody.

Drawbacks of ASIC-resistant hashes

ASIC-resistant hashes have another problem. There is a permanent threat that an ASIC manufacturer will bring a major technological breakthrough and produce a plentitude of power-efficient ASICs.

At Jax.Network, there is one more issue: the price of JAX correlates with the price of the hashrate due to a specific design of the reward function. So, if someone attempts to build a stablecoin similar to JAX based on some exotic hash, there will be a threat that technological breakthroughs will cause a currency crash of this coin.

For example, SHA-3 or Keccak is a modern, fast and efficient hash that provides a high level of security. Recently, the Ethereum Classic network has switched from Ethash to Keccak-256. However, the potential efficiency of ASIC mining for this hash is poorly studied.

The aforementioned scenario is unlikely in the case where the hash function is well-known and intensively used for mining for many years. In February 2021, the most heavily mined ASIC nonresistant hashes are SHA-256, Scrypt, Keccak-256, and Blake-2b. The percentage of electricity burnt with the last two members is relatively low.

Our choice

So, there are two primary candidates for the hash function: SHA-256 and Scrypt. The first one is used in Bitcoin and its forks, while the second one is used in Dogecoin and Litecoin.

We have a sentiment towards the Bitcoin ecosystem and its miners. This is the oldest and biggest blockchain community that values decentralization as we do. So, we decided to go with SHA-256. Decentralization is the strongest feature of Jax.Network and we believe it will lead the way to the adoption of our solution.

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