Cryptocurrency mining is the process of verifying and adding transactions to cryptocurrency’s public ledger, called a blockchain. The process helps to secure the blockchain against alteration and is also the way new units of a particular cryptocurrency are generated.
Mining involves using specialized computers or hardware to solve complex mathematical problems, which in turn validates blockchain transaction involving the cryptocurrency. Every time a problem is solved, it is added to the network as a verified transaction. Solutions to the mathematical problems are called ‘hashes’ and are rewarded with a certain amount of the cryptocurrency. In addition to verifying the blockchain, miners are also incentivized to maintain the blockchain due to the rewards.
Depending on the specific cryptocurrency, the mining process can be very complex. Some require specialized hardware, while others are mined with CPUs, GPUs, FPGAs, or ASICs. difficulty of the puzzles, the speed of the miners, and changes in the network’s hash rate all play a role in determining the success of mining.
The reward for a successful solution varies depending on the specific cryptocurrency. Some offer a fixed reward while others use a system of ‘proof of stake’ which chooses miners based on how much currency they hold.
Mining is an increasingly competitive activity, with the largest rewards being won by those with the most powerful hardware and the most efficient algorithms. As the popularity of cryptocurrencies grows, so does the mining process, with the cost of hardware and electricity often being the deciding factor in any individual miner’s success.
