Ethereum uses a Proof of Work (PoW) algorithm called Ethash. Ethash is a memory-hard hashing algorithm that is ASIC-resistant.
This means that it cannot be efficiently mined with specialised hardware, and is therefore more decentralised than algorithms like SHA-256.
The downside of Ethash is that it is very resource-intensive, and therefore requires a lot of power to run. This has led to some concerns about the sustainability of Ethereum in the long term.
Overall, Ethash is a good choice for Ethereum’s PoW algorithm as it is ASIC-resistant and therefore more decentralised than other options. However, its resource-intensity means that it may not be sustainable in the long term.