Miner

A miner is a person, organization, or device that performs computational work for a crypto network. This helps record new transactions, for example on Bitcoin.

What is a miner?

Miners work on Proof of Work networks. This is a system where computers have to solve a difficult computational problem before they can propose a new block. A block is a bundle of transactions.

The miner first checks that transactions follow the rules. Then its equipment tries to find a valid digital result. Other computers on the network independently verify the proposed block. Only after the block is accepted is it added to the blockchain: a shared digital list of transactions.

For an accepted Bitcoin block, a miner may receive new bitcoins and transaction fees. Miners don’t create unlimited bitcoins themselves. The network’s rules determine the reward.

An example of a miner

Someone sends bitcoin to another person. A miner can include this payment in a candidate block along with other transactions.

If the miner finds a valid solution and the network accepts the block, the payment is recorded on the blockchain and receives its first confirmation. The miner may receive a reward for this.

Why are miners important in crypto?

Miners help establish the order of transactions. The computational work required makes it more expensive to change past transactions. That’s why miners are important for the security of Proof of Work networks.

News about energy use, mining equipment, and the distribution of computing power often covers miners. Many miners work together in a mining pool and share the proceeds according to the pool’s rules. Mining requires equipment and electricity, while the returns are uncertain.

Miners also matter in news about a Bitcoin halving. That’s when the portion of the block reward made up of new bitcoins is cut in half. Miners don’t set Bitcoin’s rules on their own: other computers verify blocks and can reject any that don’t follow the rules. Proof of Stake networks don’t use miners; they use validators.