Mining

TL;DR

Cryptocurrency mining refers to the process of verifying and validating blockchain transactions. It’s also the process that creates new units of cryptocurrencies. The work done by miners requires intensive computational resources, but it’s what keeps a blockchain network secure. Honest and successful miners are rewarded for their work with newly created cryptocurrencies plus transaction fees.

Introduction

Coin transactions between users are confirmed and added to the blockchain public ledger by mining, a process known as "mining." In addition to removing old coins from circulation, the process of mining creates new ones.

The Bitcoin blockchain relies on mining to function as a distributed ledger. There is no need for any central authority to keep track of all transactions in the peer-to-peer network. Even though we'll be discussing Bitcoin mining, same procedure may be applied to other altcoins that use a mining algorithm similar to bitcoin's.

How Does Mining Work?

The new blockchain transactions are transferred to a pool known as a memory pool as soon as they are made. Miners are responsible for verifying the legitimacy of pending transactions and organizing them into blocks. Blocks are pages in the blockchain ledger, and each one contains a series of transactions (along with other data).

In more detail, a mining node is in charge of gathering unconfirmed transactions from the memory pool and putting them together into a candidate block. The miner will then attempt to certify this candidate block as legitimate. Nevertheless, they must first solve a challenging mathematical problem. Each block that is successfully mined rewards the miner with newly minted bitcoins plus transaction fees, but this necessitates a significant investment in processing power. A closer look at mining is in order.