Mining is the process of using computer power to verify and record transactions on a blockchain, and in return, miners are rewarded with new coins. The process of mining involves solving complex mathematical equations to validate transactions on the blockchain, a process called “proof-of-work”.
Miners use specialized hardware, called mining rigs, to solve these equations. These mining rigs require a significant amount of computational power, which in turn consumes a lot of electricity. This is why mining is often associated with high energy consumption.
When a miner successfully validates a block of transactions, they are rewarded with a specific number of new coins, along with the transaction fees associated with that block. The reward for mining a block is called a block reward. The amount of the block reward varies depending on the cryptocurrency. For example, in Bitcoin, the block reward currently is 6.25 BTC and in Ethereum is 2 ETH.
As more miners join the network, the difficulty of solving equations increases and the competition for block rewards becomes more intense, making it harder and more expensive to mine new coins.
It’s also worth to mention that not all the cryptocurrencies use the proof-of-work mechanism, for example, some use proof-of-stake where the validators are chosen based on the amount of coins they hold and lock, and they don’t need to use computational power.
