SHA stands for Secure Hash Algorithm and the 256 refers to the algorithm output length in bits. A Secure Hash Algorithm’s input data can be anything and provide a unique encrypted string. The most famous application is bitcoin, but there are a lot of other usages of the SHA-2 hash function in security applications and protocols, including SSL.

With the proof of work (POW), the majority of the network must confirm that the generated hash is a valid one. This is done through the mining activity.

The algorithm was first published in 2001 by the National Security Agency, which is a national intelligence agency of the United States. The SHA256 algorithm as part of the Secure Hash Algorithm family is widely documented and supported.

Which coins are using SHA256?

The first and most famous cryptocurrency with applying SHA256 algorithm is bitcoin. Bitcoin’s hard forks, like Bitcoin Cash is using the same algorithms as well. But there are other cryptocurrencies employing SHA256 algorithm.

The second cryptocurrency which started using SHA256 algorithm was Namecoin in 2012, which acts as an alternative decentralized DNS.

Peercoin has been introduced in 2012, which is the first cryptocurrency to use POW and POS functions. In PoS-based cryptocurrencies the creator of the next block is chosen via various combinations of random selection and wealth or age (i.e. the stake). In contrast, the algorithm of proof-of-work (PoW) based cryptocurrencies (such as bitcoin) rewards participants who solve complicated cryptographical puzzles in order to validate transactions and create new blocks.

NXT coin launched in 2014, specifically designed as a flexible platform to build applications and financial services around its protocol.

Which hardware can you use for mining with SHA256 algorithm?

You can build a cryptocurrency mining rig using SHA256 algorithm based on CPUs, GPUs, and ASIC miners.

Due to the nature of the algorithms, Application-Specific Integrated Circuit chips (ASICs), the mining hardware which is created solely to solve the hashing function of this specific algorithms is the most cost-efficient way to run your mining equipment. These dedicated mining hardware equipment is specially designed to make the cryptocurrency mining profitable with the most efficient energy usage and computational chips. Because of this, the price of the ASIC miners are relatively high due to both the research and development part and also because of the increasing demand for these hardware. Nevertheless, the shops selling ASIC miners ofter run out of stock even just based on pre-orders as most people try to get their hands on new equipment until the difficulty increases to that level that the profitability is impacted. ASIC miner is powerful hardware which consume a lot of electricity when running the mining equipment.

You can run the SHA256 algorithm with mining rigs based on your own PC and laptop. However CPUs and GPUs, due to the high difficulty rate it would take ages until you would find the first block running these machines.

Pro

widely documented and supported
it is possible to use CPU, GPU, and ASIC

Cons

it is only profitable to mine with ASICs
less energy efficient compared to other algorithms