How does cryptocurrency mining work?

For cryptocurrency mining, all of the work happens on a mining computer or rig connected to the cryptocurrency network — no burro riding or gap-toothed gold panners required! Cryptocurrency miners add transactions to the blockchain, but different cryptocurrencies use different mining methods, if the cryptocurrency uses mining at all.

What is the difference between a cryptocurrency miner and a gold miner?

The cryptocurrency miner’s work is different from that of a gold miner, of course, but the result is much the same: both make money. For cryptocurrency mining, all of the work happens on a mining computer or rig connected to the cryptocurrency network — no burro riding or gap-toothed gold panners required!

How much does a cryptocurrency pool cost?

Pools generally charge a small fee to coordinate everything — typically under one percent for large-scale miners. Since cryptocurrency blockchains are transparent by design, we can see exactly how influential these pools are. In the case of Bitcoin, over 70% of the network’s total hash rate comes from known mining pools.

Is cryptocurrency mining a game of hyper-optimization?

However, mining is certainly a game of hyper-optimization that requires quite a bit of technical expertise and patience. Do cryptocurrency miners operate independently? For a cryptocurrency to be truly decentralized, each miner should ideally only control a tiny fraction of the network’s total hash rate.