Blockchain Mining: Understanding Its Difficulty in Terms of Hashing Algorithm Efficiency

Abstract

This study systematically evaluates the performance of the hashing algorithms SHA-2 and SHA-3 (in both 256-bit and 512-bit variants), as well as MD5, in generating and verifying a thousand-block chain to understand the computational costs associated with blockchain mining. Java-specific source code was developed to simulate key aspects of a blockchain back-end environment, focusing on block creation and validation. The five distinct hashing algorithm configurations were tested at varying levels of complexity, with performance measured by the duration of each test. The study reveals that SHA-3, despite producing stronger hash values, is slower than MD5 and SHA-2. An optimal balance between security and calculation time was achieved at a four-character complexity level. While higher complexity levels enhance security, they significantly reduce performance, deeming them suitable for systems with lower data processing needs. These findings can guide small and medium-sized businesses in understanding the computational costs of employing blockchain technologies.