currency mining) The competitive process that verifies and adds new transactions to the blockchain for a cryptocurrency that uses the proof-of-work (PoW) method. The miner that wins the competition is rewarded with some amount of the currency and/or transaction fees. Following are the ways mining is performed. See proof-of-work algorithm
Anyone can purchase specialized miner hardware and connect to the Internet. This was more feasible in the early 2010s than it is today. However, new currencies come online all the time, and if they employ the proof-of-work (PoW) method rather than proof-of-stake (PoS), regular computers or computers with high-end GPUs may be sufficient for mining. See miner hardware
Organizations combine their resources to obtain a huge amount of mining hardware. Mining pools are also open to the public, whereby anyone can add their computers to the network.
See pool mining
People can rent time on a cloud mining service and pay a monthly fee. See cloud mining
The puzzle miners attempt to solve for Bitcoin and Ethereum, the two major cryptos, consumes a lot of electricity. Known as the "proof-of-work" consensus algorithm, the Digiconomist website says Bitcoin and Ethereum together consume as much energy as Indonesia. However, Ethereum is changing its consensus method, which began in late 2020 (see Ethereum 2.0
). Contrast with crypto minting
. See consensus mechanism
, Bitcoin mining
Everything About Mining
Peter Kent and Tyler Bain explore crypto mining in depth. For anyone who wants to know the ins and outs of this complicated business, their book is must reading.