Blockchain mining is the competitive process that verifies and adds new transactions to the blockchain. For more information on the blockchain click here.
Proof of work is the process by calculating quadrillions of mathematical transformations known as “hashes”. The hash rate of a computer, GPU (Graphic processing unit), or ASIC (Application-specific integrated circuit) miner determines how successful a user will be in earning the block. But only one can be the winner. This process also consumes a lot of electricity. According to reports, Bitcoin and Ethereum collectively consumes as much energy as Indonesia!
The “Block” is a place in the blockchain where information is stored and encrypted. Blocks and the information in the blocks must be verified by a network before new blocks can be created.
The Second most common consensus method is proof-of-stake. The difference between this and proof-of-stake is that the profit relies on how much crypto the miner owns.
Why do we need this?
Miners are getting paid for their work as auditors. They are verifying the legitimacy of blockchain transactions, as well as supporting the blockchain of your choice. Blockchain mining solves the problems such as copying, counterfeiting or double spending of the same coin. Since there is no central authority such as a bank, court, government, or anything else determining which transactions are valid and which are not. The process of blockchain mining achieves a decentralized consensus through the proof-of-work method.
You shouldn’t confuse mining with investing. A person can be engaged in both activities, but there is a difference. Mining brings immediate profits, whereas investment brings profits in the long run.