It's something I was just thinking about as I was writing the comment but I didn't like the idea too much. The course now only has time for two serious projects: one is a game and another is a a little CPU. I think they're the right combination of fun and pedagogically useful.

In terms of what students would learn from this project: it would be some fairly straightforward sequencing and buffering logic and the weird combinational munging that hash algorithms tend to do. I think there's more to be learnt by building the little CPU. And we have quite a few sophomores who may not appreciate what a cryptographic hash function is and why we might be interested in building a hardware accelerator for it. We could possible do some extra sessions, introduce them to hash functions, motivate hardware accelerators and so on but it seems like it's not worth the trouble.

I think this assignment would be more suitable for a crypto/security course in an EE department.