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What Is Crypto Mining?

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When I was a seventh grade student, I was already attracted by the cryptocurrency world. At first, I thought it was a free currency generator. As long as I let my laptop run Crypto-mining software like hot wheels, it will give me free cryptocurrency.

Finally, my notebook computer did produce cryptocurrency, however, there were only very, very few cryptocurrency.

What I do with my laptop is essentially “crypto mining”.


You may have heard of cryptocurrency Bitcoin or a noun called “mining” related to such cryptocurrency.

Crypto mining, in short, is the process by which miners or individuals use equipment to engage in “work” supporting blockchain networks in order to obtain cryptocurrency rewards.

Small peer-to-peer networks Sketches on Onenote

Blockchain: It is a network distributed record or Distributed Ledger that records the behavior of those people on the network. Therefore, for crypto blockchain networks, the blockchain function will be to record personal transactions on the network.

In this article, I will take Bitcoin as an example to interpret the meaning behind mining.

Back to the topic of “work” for miners. In order for miners to receive Bitcoin rewards, the simple “job” for miners is to verification transactions on Bitcoin blockchain.

During verification, the mining will perform a series of checks to ensure that the assigned transaction is legal and that the transaction participant will not pay the same amount of cryptocurrency twice. For example, when Joe sends Brandon 12 Bitcoin and Brandon tries to send Tony 7 Bitcoin and Max 8 Bitcoin, this will be considered a fraudulent transaction because 7+8>12. The situation I have just given is an example of the “double spend problem”: Brandon try to consume the same Bitcoin twice.

Miners have verification Bitcoin transactions between 0-4 megbytes (about 1500-3000 transactions), which is equivalent to the approximate maximum size of a blcok. They have completed half of the easier work to get Bitcoin rewards. However, the task before verification is the most complicated, making miners eligible to verification transactions.

The Luck Part of Digging Mining

By taking the lead in solving the calculation of a string sequence, the so-called creation Proof of Work (Proof of Work). Creating Proof of Work (Proof of Work) is the process that miners need to calculate most. (I will explain why it is called Proof of Work in later chapters.)

In order to understand the Proof of Work algorithm, you must first be familiar with the word “hash” in the blockchain.

The way the network detects tampering of blocks in the blockchain is through its hash. A long string consisting of numbers and characters defined by the information in the block.

By passing the data through a hash function, such as the SHA-256 used by the Bitcoin, a sequence for that particular inputs is generated. This means that if inputs data changes even one character, the outputs hash will change completely. In addition, the hash is a result that can be encrypted but not decrypted. Therefore, it cannot be used to obtain the original data, but can only be used as a way to verification whether the input data of the hash is the same.

Creating a Proof of Work (Proof of Work) requires miners to run a hash algorithm to “guess” the appropriate answer to the question. For Bitcoin blockchain networks, miners must take the lead in creating a hash that meets certain requirements. This hash is called “target hash”.

The necessary information to guess the target hash exists in the blcok header of the new blcok. Contains blcok version number, timestamp, hash of the previous blcok, and target hash.

Sketch of Guess Process on onenote

The answer to the target hash is generating by the hash of the previous blcok, the current blcok transaction data, adding 0-4,294,967,296 integers (nonce), and then putting them into the hash algorithm.

If the answer meets the requirements of the target hash, the blcok will be added to the blcok chain. The miner who verification the transaction and finds the nonce added to the hash of the block will get the Bitcoin reward. Otherwise, they will constantly try to find effective target values. Due to the randomness of the hash algorithm, we need to do a lot of random guesses to determine the value that satisfies the target hash.

Although it is already quite difficult to find nonce, and there are more than or equal to one million other individuals competing with you on the same network, the chance of a device getting a Bitcoin reward is similar to the chance of winning the lottery. Therefore, you can get faster Hash Rate (units include: KH/s, MH/s, GH/s, etc.) by improving processing power or using multiple devices.

The term Hash-rate can be interpreted as the amount by which a device or group of devices calculates numbers and verification how fast the transaction is (a measure of computing power).

Consensus mechanism

A P2P-decentralized network like Bitcoin blockchain has no central key figures and can only make decisions according to different Consensus mechanisms. While the Consensus mechanism is transaction validation, it also lays the mining goal.

Consensus mechanisms take many forms, but they are all for the same goal: “verify and ensure the authenticity and integrity of records” (source: Tech in Asia).

There are currently three main mechanisms: Proof of Work of Work, proof of rights and interests and proof of power. In this article, I will focus on the Consensus Proof of Work (Proof of Work) method.

Speaking of mining, this summarizes how the Proof of Work (Proof of Work) mode works: individuals first create a Proof of Work (Proof of Work), and then they verification Bitcoin transactions to ensure records in the blockchain.

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