Ethash

Ethash is Ethereum‘s Proof of Work hashing algorithm. The algorithm is GPU memory intensive to discourage CPU mining and future development of ASIC‘s.

Ethash is intended to satisfy the following goals:

IO saturation: The algorithm should consume nearly the entire available memory access bandwidth (this is a strategy toward achieving ASIC resistance, the argument being that commodity RAM, especially in GPUs, is much closer to the theoretical optimum than commodity computing capacity)
GPU friendliness: We try to make it as easy as possible to mine with GPUs. Targeting CPUs is almost certainly impossible, as potential specialization gains are too great, and there do exist criticisms of CPU-friendly algorithms that they are vulnerable to botnets, so we target GPUs as a compromise.
Light client verifiability: a light client should be able to verify a round of mining in under 0.01 seconds on a desktop in C, and under 0.1 seconds in Python or Javascript, with at most 1 MB of memory (but exponentially increasing)
Light client slowdown: the process of running the algorithm with a light client should be much slower than the process with a full client, to the point that the light client algorithm is not an economically viable route toward making a mining implementation, including via specialized hardware.
Light client fast startup: a light client should be able to become fully operational and able to verify blocks within 40 seconds in Javascript.

Source: https://github.com/ethereum/wiki/wiki/Ethash-Design-Rationale

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