Mining is the process by which new blocks of transactions get validated and added to a blockchain, using the proof of work consensus protocol. Let us unpack that a little…
Think of a blockchain as a database, or ledger, of transactions. But rather than being held by one person or organisation, the database is distributed across thousands of different and autonomous computers (known as nodes). When new data needs to be added, this network of computers work to reach consensus that the latest changes are valid and honest.
This decentralised approach avoids the need to rely upon a third party intermediary to confirm the validity of the changes, and so removes the need for trust. Different blockchains employ different approaches to update their chains with the latest transactions, and these are known as consensus protocols.
In the case of Bitcoin, Ethereum, Litecoin and others, the consensus protocol employed is called proof of work, and the nodes engaged in updating the blockchain are called miners. The days of home PCs mining cryptocurrencies have pretty much disappeared, however, with dedicated computers known as mining rigs (such as the Antminer S9 shown below) becoming the equipment of choice, often employed in banks of thousands in huge mining farms.