Ethash

Ethash was the proof-of-work algorithm that secured the Ethereum blockchain from its launch in July 2015 until September 2022, when Ethereum switched to proof of stake in the upgrade known as the Merge. Miners competed to find valid blocks by running Ethash, and the winner earned newly issued ether plus fees. The algorithm was designed to be memory-hard: finding a solution depended more on reading quickly from a large dataset in memory than on raw calculating speed.

That design aimed to keep mining accessible to people with ordinary graphics cards and to resist domination by specialized chips, in contrast with Bitcoin's SHA-256 mining, which came to be dominated by custom hardware. Ethash evolved from an earlier design called Dagger-Hashimoto, combining ideas from Vitalik Buterin and the researcher Thaddeus Dryja. Although Ethereum no longer uses it, a modified version, Etchash, still secures Ethereum Classic.

Mining under Ethash was like a race in which runners had to keep fetching random pages from an enormous book and combining what they found. Running faster did not help much; what mattered was how quickly each runner could flip to the right page. Because the book was too large to fit in a small, cheap chip's memory, the race favoured machines with plenty of fast memory, such as the graphics cards in gaming computers.

The book was also rewritten every few days and grew slowly over time, so a machine with too little memory would eventually be unable to keep up. That steady growth became one of the reasons older graphics cards dropped out of Ethereum mining.

1. Seed and cache. For each Ethash epoch of 30,000 blocks, roughly five days, a seed was derived from earlier blocks, and from it a small cache of a few tens of megabytes was generated.
2. The DAG. From the cache, miners built a much larger dataset known as the DAG, after the directed acyclic graph structure of an earlier design. The DAG started at about 1 gigabyte in 2015 and grew with each epoch, passing 4 gigabytes around the end of 2020.
3. Hashing loop. To test a candidate block, a miner combined the block header and a nonce, then repeatedly fetched pseudo-random pieces of the DAG and mixed them, using the Keccak hash function, to produce a final result.
4. Checking the target. If the result was below the target set by mining difficulty, the block was valid. Other nodes could verify it cheaply using only the small cache.

Ethash was intended to be ASIC resistant, meaning that application-specific integrated circuits would gain little advantage over general-purpose graphics processing units. For several years Ethereum mining was dominated by GPU mining rigs and large mining pools. From 2018, however, manufacturers released Ethash ASICs that were more efficient than GPUs, although their edge was much smaller than in Bitcoin mining. A proposed replacement algorithm, ProgPoW, designed to restore GPU parity, was debated in 2019 and 2020 but never adopted, partly because Ethereum planned to leave proof of work altogether.

On 15 September 2022, Ethereum's original chain merged with the Beacon Chain, and block production passed to validators under proof of stake. From that moment Ethash no longer played any role on Ethereum, and the network's energy use fell by more than 99% by most estimates. Miners lost the ether block reward overnight. Daily issuance of new ether fell by roughly 90%, because validators receive far smaller rewards than miners had, which together with fee burning changed the coin's supply outlook. The switch had been planned for years and was rehearsed on several test networks, and in the months before it miners were warned repeatedly that their revenue from Ethereum would end at a set point determined by total mining difficulty rather than by a calendar date. Some moved their hardware to other proof-of-work coins, while others shut down or turned to renting GPUs for computing work, a trend discussed under decentralized GPU. A fork that kept Ethash running under the name EthereumPoW attracted little lasting support.

Ethereum Classic, which split from Ethereum in 2016, originally used Ethash too. As its DAG approached the memory limit of popular 4-gigabyte cards, the network adopted a change in late 2020 that doubled the epoch length to 60,000 blocks, slowing the DAG's growth so that those cards could continue mining. The modified algorithm is called Etchash. After the Merge, a large share of former Ethereum mining power moved to Ethereum Classic, sharply raising its hashrate, although much of it later left as mining revenue proved too low to cover costs.

Critics noted that the growing DAG forced periodic hardware upgrades and created electronic waste, that ASIC resistance proved only partial and that proof-of-work mining, under any algorithm, consumed large amounts of electricity. Supporters credited Ethash with allowing a broad base of individual miners to take part during Ethereum's early years.