What is SHA-256?

SHA-256 (Secure Hash Algorithm 256-bit) is a cryptographic hash function from the SHA-2 family. It takes any input and produces a fixed 256-bit digest. Bitcoin and many other proof-of-work networks use it as the core of their mining puzzle.

A secure hash function like SHA-256 is designed to be:

• Deterministic - the same input always yields the same hash.
• Fast to compute - miners can hash at very high rates with ASICs.
• Pre-image resistant - you cannot reverse a hash to recover the original input.
• Collision resistant - finding two different inputs with the same hash is impractical.
• Avalanche effect - a tiny change in input completely changes the output.

Learn the asset first: What is Bitcoin in NZ →

Hash functions underpin data integrity checks across the web - not only blockchains. If data is altered in transit, the hash no longer matches what was expected, which helps detect tampering (including man-in-the-middle style attacks on signed payloads).

On a blockchain, each block header includes a hash of the previous block. That chaining is what makes historical records hard to rewrite without redoing enormous work - a property often called immutability in practice, enforced by proof-of-work and network consensus rather than a single server.

Bitcoin miners compete to find a block header whose hash meets the network difficulty target. That process is proof-of-work: brute-forcing nonce values until SHA-256 outputs a sufficiently small number. Hashrate - how many hashes per second your hardware can try - is the main measure of mining power for SHA-256 coins.

In New Zealand, profitability still comes down to electricity cost, machine efficiency, Bitcoin price, and pool fees. SHA-256 ASICs dominate Bitcoin; GPUs are generally a poor fit for this algorithm today.

Related guides: Crypto mining NZ hub · ASIC mining NZ · SHA-2 (Wikipedia)