What Is Mining in Simple Terms? How Cryptocurrency Mining Works

What a miner actually does

A miner receives data for a new block from the network and checks billions of possible cryptographic hashes every second. The winner is the participant who first finds a solution that satisfies the network's current difficulty.

In a pool, a miner does not necessarily find a complete block alone. The miner sends partial proofs of work — shares — to the pool. The pool combines the power of many devices, finds blocks and distributes payouts in proportion to the work performed.

• hashrate — the number of attempts per second
• difficulty — how hard it is to find a valid solution
• reward — coins and fees for a discovered block
• pool fee — the fee charged for organizing shared mining

Can you mine with a regular computer?

Bitcoin was first mined with CPUs and later with graphics cards. Today, specialized ASIC devices are the economically competitive option for large Proof-of-Work networks. A regular PC can be useful for learning, but it is not necessarily profitable.

Before buying hardware, calculate more than coin revenue: include electricity, pool fee, uptime, a profitability reserve, hardware cost, noise, heat and repairs.