HOW CRYPTO MINING WORKS

Crypto miners use special computer hardware to do the complex mathematical cryptography required to confirm each transaction on a blockchain. This process, called “proof of work” (PoW), requires miners to complete billions of calculations in order to verify a block of transactions. Proof of stake (PoS) is another consensus mechanism by which crypto is created, but PoW is common to many forms of crypto.

Crypto mining is highly competitive. The process relies on a network-wide consensus that essentially backs the validity of each transaction, even without a central authority. Once a miner has completed a certain number of calculations to verify a block of transactions on a given blockchain platform, they may be rewarded with new coins if they are the first to verify the block.

Because proof-of-work crypto mining requires immense amounts of energy, there are concerns that the types of crypto that rely on PoW may be harmful to the environment.