How does crypto mining work?

How Does Crypto Mining Work?

In proof-of-work chains like Bitcoin, mining works in a cycle. Miners collect pending transactions, bundle them into a block, and try to find a number (nonce) that makes the block's hash meet the network's difficulty target. The first miner to find a valid solution broadcasts the block; others verify it and add it to their copy of the chain. That miner earns the block reward and fees.

Difficulty

The network adjusts difficulty so that blocks are found roughly on a schedule (e.g. every 10 minutes for Bitcoin). More miners mean harder puzzles. This keeps the system predictable and secure.

Rewards

Block rewards are new coins. They halve on a schedule (e.g. Bitcoin halving). Miners also earn transaction fees paid by users. Over time, fees are expected to make up more of miner income.

Alternatives

Proof of stake (used by Ethereum and others) does not use mining. Validators stake coins and are chosen to propose blocks. This uses far less energy. If you are interested in earning crypto, staking or investing may be more practical than mining for most people.