Mining

The miner adjusts a value called a nonce and hashes the block header until the result falls below a difficulty target. Each network uses its own hash function: Bitcoin uses SHA-256 (double), Litecoin uses Scrypt and Monero uses RandomX, oriented toward CPUs. Difficulty is readjusted to keep an average block time stable. Bitcoin does this every 2016 blocks, roughly every two weeks, to sustain a block about every ten minutes. Hashrate measures the network's total computing power: the higher it is, the more expensive it is to attack.

Mining serves three roles at once. It is the issuance mechanism for new coins, the Sybil resistance native to Proof of Work, where you vote with physical computation rather than cheap identities, and the source of economic security, since rewriting history requires redoing all accumulated work, which is prohibitively expensive. The reward combines the block subsidy, which in Bitcoin halves every 210,000 blocks (the April 2024 halving set it to 3.125 BTC), plus transaction fees.

In practice, Bitcoin is the main Proof of Work network in production, with well-known pools such as Foundry USA, AntPool and F2Pool. One durable, relevant fact: Ethereum stopped being mined on 15 September 2022 with The Merge, migrating from Proof of Work to Proof of Stake. It is worth keeping this in mind when describing today's landscape, since the energy cost of mining has shaped much of the public and regulatory debate.