Before transactions can be stored on the blockchain, they must first be verified. Additionally, the blockchain network needs to be maintained, and new cryptocurrencies must be created over time. These tasks are handled by a group of people known as “miners.”
🔴 What is Cryptocurrency Mining?
Cryptocurrency mining is the process of validating crypto transactions and adding them to the blockchain network in exchange for rewards. For Bitcoin, miners must solve complex mathematical puzzles using powerful computers. This method is known as the Proof-of-Work (PoW) consensus. Since solving these equations requires high computational power and a significant amount of energy, PoW is an expensive and resource-intensive process.
Bitcoin miners who successfully solve these problems can add blocks of verified transactions to the blockchain. In return, they are rewarded with 6.25 Bitcoins (worth around $262K at current rates).
🔴 Other Mining Methods
Other cryptocurrencies like Solana and Cardano use a different system called Proof-of-Stake (PoS). In PoS, miners maintain and secure the network by "staking" or locking up their coins. Mining power is attributed based on the proportion of coins staked, making it a more energy-efficient alternative to PoW. Stay tuned for more about cryptocurrency wallets in the next part of this series!
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