Cryptocurrency Mining

02 Mar 2022

Mitchell Nixon


Each individual cryptocurrency runs on a blockchain; that’s a shared ledger, replicated multiple times across a network of computers. Each transaction that is made, as well as the ownership of every single cryptocurrency in circulation is recorded on the blockchain. The blockchain itself is run, or powered, by miners, who use computers to process the transactions. The purpose of miners is to validate the authenticity of each transaction and also ensure the blockchain is secure by solving a computational problem; called a Proof of Work (PoW) scheme. For allowing the blockchain to use their computing power, miners are then rewarded for their services in the form of cryptocurrency fees paid for by those transactions on the network.

Mining cryptocurrency requires a computer & special program which allows the miner to solve the complex mathematical problems received from the blockchain & then submit the results back to the network. Miners compete with others on the network, so the most common practice is to join a mining pool, where miners pool their computing power and results in a higher chance of reward. Miners within the pool are paid based on the total percentage they contribute to the pool’s overall hashrate. Miner’s contributions to the network are measured in hash values, which are numeric values of fixed length that identify data.