Source : coinbase
Cryptomining is a process that allows to validate as well as secure transactions in certain blockchains, especially those that use the validation method called Proof of Work. Cryptomining has an essential role in the proper functioning of cryptocurrencies. Without the miners, the system simply could not work, because they are the ones who ensure that each operation is recorded and that the rules of the network will be properly respected.
Cryptomining consists of using the computing power of a computer, or a group of computers, to solve a complex mathematical problem. When this problem is solved, a new block can be added to the blockchain. The miner who found the solution will receive a reward, often in the form of cryptocurrency, which will encourage him to continue participating in the system. This activity is not only technical, it is also economic. It allows a global monetary network to function without an intermediary. Mining plays a double role: to guarantee the security of systems and to circulate the currency.
This system is meant to work without the presence of a central authority. It plays the role that banks or traditional transaction institutions usually play. It allows all operations to be validated in a decentralized way by different users from all around the world who put their computing equipment at the service of the network.
How does mining work?
The principle of mining is based on competition, that is to say that when a group of transactions needs to be validated, the different computers of the network that participate in mining will try to find the solution to a very complicated calculation. This one has neither shortcut nor simple trick. It requires a lot of computing power and many attempts before finding the correct answer. So, the first computer that finds the solution announces that it succeeded, the other computers will verify that the answer is correct, and if everything is good the block is validated and then added to the blockchain. The miner will therefore receive a reward.
This process requires a large amount of energy because the machines work intensively. Large mining operations use very powerful computers that are often grouped together. This is what we call a mining farm, where a large number of devices run day and night. The more computing power a miner has, the more chances he has to solve the calculation before the others, and this is what creates this competition.
It is good to know that the difficulty of the calculations adjusts depending on the number of miners present on the network. The more participants there are, the more complex the calculation becomes, which prevents blocks from being created too quickly. This system helps maintain a rhythm in the production of blocks, which are every 10 minutes for Bitcoin. This clearly shows that mining is a technical process that is balanced, economic, and carefully regulated.
Why is Cryptomining Important?
- It secures the network:
- Miners solve complex calculations to check that transactions are valid and to prevent fraud.
- It ensures the coherence of the blockchain:
- Mining ensures that all operations are correctly recorded, without contradiction.
- It prevents double spending:
- Thanks to mining, it is impossible to use the same cryptocurrency twice for two different transactions.
- It replaces the central authority:
- It is the network participants, not a bank or an institution, who ensure the proper functioning of the system.
- It allows new currency to be created:
- When a miner validates a block, they receive a reward in cryptocurrency, which introduces new units into the system.
- It follows precise rules:
- The rhythm of currency creation is defined by the code of each cryptocurrency, which prevents uncontrolled inflation.