What is Cryptocurrency Mining?

Cryptocurrency mining is the backbone of Proof-of-Work (PoW) blockchains like Bitcoin. Miners compete to solve complex mathematical puzzles, and the first to find the solution gets to add a new block to the blockchain.

How Mining Works:
1. Transactions are collected into a block
2. Miners race to find a valid hash (nonce) that meets the difficulty target
3. The winning miner broadcasts the block to the network
4. Other nodes verify the block and add it to their chain
5. The miner receives the block reward (new coins + transaction fees)

Types of Mining:
- Solo Mining: Mining alone—high reward but very low probability
- Pool Mining: Joining forces with others—smaller, more consistent rewards
- Cloud Mining: Renting mining power from data centers

Hardware Evolution:
- CPU → GPU → FPGA → ASIC (Application-Specific Integrated Circuit)
- Modern Bitcoin mining requires specialized ASIC hardware
- Some coins (Monero) are designed to resist ASICs

Environmental Impact:
Bitcoin mining consumes significant energy (~150 TWh/year). This has sparked debate about sustainability, leading some networks to adopt Proof-of-Stake (like Ethereum in 2022).