Mining

Mining is computational work that miners use to verify transactions and add new blocks to a blockchain. Some cryptocurrencies, such as Bitcoin, use mining.

What is mining?

During mining, a miner verifies transactions according to the network's rules. The miner then creates a candidate block: a collection of those transactions.

Specialized equipment then performs many calculations, searching for a hash, a digital result that meets the network's requirements. When a miner finds one, other participants verify the block. Only a valid block is added to the blockchain.

This process is called proof of work. It helps secure the shared transaction history without a central administrator. A miner may receive a reward in new coins, transaction fees, or both. Not every cryptocurrency uses mining: proof-of-stake networks work differently.

An example of mining

A Bitcoin miner collects valid transactions into a block. Specialized equipment then searches for a suitable hash.

If the Bitcoin network accepts the block, the miner may receive the block reward. But the equipment and electricity cost money, so mining doesn't automatically make a profit.

Why is mining important in crypto?

Mining processes transactions and helps secure proof-of-work networks, including Bitcoin. A large amount of computing power makes it more expensive to rewrite recent blocks. More computing power gives a miner a better chance, but doesn't guarantee a reward.

Articles about mining often discuss electricity use, equipment, mining pools, and miners' profitability. The environmental impact depends in part on the energy source and the equipment used.

The halving may also come up when discussing Bitcoin. It periodically reduces the number of new bitcoins miners can receive per block. Miners can't simply create extra coins or ignore the rules: other participants reject invalid blocks.