Cryptocurrency mining is the process by which new units of a cryptocurrency are created and transactions are added to the blockchain. The process involves solving complex mathematical problems that validate and secure transactions on the network. Here's a general overview of how cryptocurrency mining works:
- Transactions: Users initiate transactions by sending cryptocurrency from one address to another. These transactions are broadcast to the network and collected in a pool of unconfirmed transactions.
- Block Formation: Miners select a set of transactions from the pool and organize them into a block. A block is a collection of transactions with a header containing metadata.
- Proof of Work (PoW): Most cryptocurrencies, including Bitcoin, use a consensus algorithm called Proof of Work. Miners compete to solve a cryptographic puzzle related to the block's header. This puzzle is computationally intensive and requires significant processing power to solve.
