What is Mining?

What is Mining?

Cryptocoins like bitcoin are created as a reward in an open competition in which users ("miners") offer their computing power to verify and record transactions into the blockchain, by solving complex cryptographic puzzles ("Proof-Of-Work"). This activity is referred to as mining and successful miners are rewarded with transaction fees and newly created coins.

There are many proof-of-work hashing algorithms in use today, such as SHA-256, Scrypt, Equihash, NeoScrypt etc and each one has an increasing difficulty level. SHA-256, used in Bitcoin, and Scrypt (used in Litecoin) favour raw processing power and thus bitcoins and litecoins are now mined by specialised processors called ASICs (see photo). Other PoW algorithms such as Ethash (used in Ethereum mining) and Equihash (used in Zcash mining) favour greater amounts of RAM and parallel processing and are thus mined by GPU cards.

Also see: Cryptocurrency Mining Profitability Calculators

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