Scrypt-based miners and the new cryptocurrency arms race

Manufacturers are planning to ship scrypt-based equipment that will speed up mining and reduce the power overhead for the alternative cryptocurrency algorithm. Could this fuel the next cryptocurrency arms race?

Most cryptocurrencies that are mined by computers use a ‘proof of work’ algorithm, designed to make them prove that they have invested the computing power in producing the coins. Bitcoin uses SHA–256, but many alternative coins (altcoins) use another system, called scrypt.

One of the biggest differences between scrypt and SHA-256 is that the former relies heavily on computing resources aside from the processing unit itself, particularly memory. Conversely, SHA-256 doesn’t. This makes it difficult for scrypt-based systems to scale up and use lots of computing power, because they would have to use a proportional amount of memory, and that is expensive.

“It makes it difficult to run many instances of scrypt in parallel in a graphics card, for example,” said Charles Lee, the inventor of litecoin, adding:

“This also means that the manufacturing cost of scrypt ASICs will be significantly more expensive than that of SHA-256 ASICs.”

Nevertheless, some companies are beginning to tout hardware dedicated to mining scrypt-based coins such as Lee’s. One is Crypto Industries, based in London, UK. It will shortly launch pre-orders for three different boxes: the Isis, a 1MH/sec unit, the 5MH/sec Osiris, and the 10MH/sec Horus.

Mike Kular, co-founder of the company, worked as a marketing manager before leaving his job to trade coins full-time. He was mining SHA-256 and scrypt-based coins with a 20-GPU setup, but it was costing him £600 per month, he said.

“What’s important is the efficiency of the power you’re giving the machine,” Kular said. “You’re getting 2-300% more power efficiency using our machines.”

Crypto Industries’ mining units are based on Field Programmable Gate Array (FPGA) chips, from Xilinx, and will…

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