Block Chain - Mining in Blockchain

1. Definition

Mining is the process of:

  1. Validating transactions on the blockchain network.

  2. Grouping them into a block.

  3. Solving a cryptographic puzzle (Proof of Work) to make the block valid.

  4. Adding the block to the blockchain permanently.

Miners are rewarded (in cryptocurrency) for their work.

2. How Mining Works (in Proof of Work systems like Bitcoin)

  1. Transaction Collection – Miners pick unconfirmed transactions from the “mempool.”

  2. Block Creation – They bundle these transactions into a candidate block.

  3. Puzzle Solving – Miners must find a hash (via SHA-256 in Bitcoin) that meets certain difficulty criteria (e.g., hash starting with many zeros).

    • This requires huge computational power.

  4. Broadcast & Verification – When a miner finds a valid solution, they broadcast the block.

  5. Consensus – Other nodes verify it. If valid, the block is added to the chain.

  6. Reward – The miner receives:

    • Block Reward (newly minted coins)

    • Transaction Fees from included transactions

3. Purpose of Mining

  • Secures the Network – Makes it costly and nearly impossible to alter past transactions.

  • Prevents Double Spending – Ensures the same coin isn’t spent twice.

  • Decentralization – No single party controls the ledger; miners collectively maintain it.

  • Coin Issuance – Introduces new coins into circulation.

4. Example (Bitcoin Mining)

  • Block time: ~10 minutes.

  • Reward: Initially 50 BTC, now 6.25 BTC (halved every ~4 years).

  • Difficulty: Adjusted every 2016 blocks to keep block time steady.

5. Challenges of Mining

  • Energy Consumption – Very high in PoW systems.

  • Hardware Costs – Specialized machines (ASICs) are expensive.

  • Centralization Risk – Mining pools can dominate hashing power.

In short:
Mining is the heartbeat of Proof of Work blockchains — it validates transactions, secures the network, creates new blocks, and rewards miners with cryptocurrency.