Introduction to Blockchain Mining

In this Blockchain tutorial, we are going to learn about the concept of Blockchain Mining. And we will also understand various topics related to Blockchain Mining. Moreover, we will illustrate the following topics in detail.

  • What is Blockchain Mining
  • Types of Blockchain Mining
  • Process of Blockchain Mining
  • Uses of Blockchain Mining

What is Blockchain Mining

Before understanding the concept of blockchain mining, let’s recall some of the basis of blockchain technology.

The term “Blockchain” consists of two terms “Blocks” and “Chain“. Now, blocks in the blockchain collect transactions together and distribute them to each node in the network.

A single block contains transaction data and information in the form of a block header. Whereas the connection that connects one neighborhood block to the next is referred to as a chain.

What is Blockchain Mining

Now, let’s come back to the main topic that is Blockchain Mining. Blockchain mining is a process of validating each step of the transaction.

Moreover, this process is mostly associated while working with cryptocurrencies, like Bitcoin.

The process of blockchain mining includes adding transactions to an existing ledger of transactions, which is distributed among all users in the blockchain.

Now, the people involved in this process are known as Blockchain miners, and they operate in a maze of computational hardware and software.

The mining operation is usually done on a dedicated computer system because it necessitates a fast CPU, as well as more energy than normal computer operations.

The primary motivation for mining is that individuals who choose to mine on a computer are rewarded for doing so.

For example, in the case of Bitcoin mining, each successful mining attempt is rewarded with a bonus of several bitcoins.

To better understand various components in Blockchain refer to Blockchain Architecture.

Read Hashgraph vs Blockchain

Process of Blockchain Mining

So, from the previous section, we got a clear idea about what is Blockchain Mining. Next, let’s understand the whole mining process in detail.

As discussed earlier, the mining process is mostly associated with cryptocurrencies like Bitcoin and Ethereum. So, we will also discuss the step-by-step procedure of mining a cryptocurrency. And the steps are as follows.

Selecting a transaction

The whole process starts when a transaction is performed. For cryptocurrencies, the transaction involves the transfer of some crypto or token from one user’s wallet to another.

Once a transaction is completed, the wallet program notifies it to the miners on the blockchain, who will pick and confirm it. This transaction is added to the pool of unconfirmed transactions, where it awaits a miner’s turn.

Moreover, unconfirmed transactions are used to generate a little group called pools of unconfirmed transactions.

Next, the miners select a transaction from the pool of from a pool of unconfirmed transactions. And even different miners can choose the same transaction.

New transactions are validated by miners and entered onto the global ledger i.e. blockchain.

Also read, What is Corda Blockchain

Mining and formation of new block

The transactions are chosen by miners and then grouped to make a new block. To be added to a blockchain, the block now requires a signature. And for this, miners authenticate transactions by solving a difficult mathematical problem known as proof of work.

For this task, the miner must first figure out the nonce value, which is the mathematical problem that miners must solve to generate a hash.

The miner that receives the qualified output will add the next block into the blockchain. Moreover, that miner also needs to inform other miners about the block and its signature.


In the next phase, The other miners will check the authenticity of the miner’s signature by hashing the data string from the broadcasted block and comparing it to the signature.

Once the block is verified then, the block will be ready to be added to the blockchain and also distributed across all network nodes.

Also, read: Consensus in Blockchain

Types of Blockchain Mining

The mining process can become extremely complex, and using a standard desktop or PC for this task will not be feasible. As a result, mining requires a specific collection of hardware and software to match the required skill.

Moreover, the mining process can be carried out in the following ways.

Types of Blockchain Mining
Types of Blockchain Mining

Individual mining

This type of mining is based upon a single user where a user first needs to register as a miner. Now, wherever a transaction takes place, a mathematical problem is sent to all single users in the blockchain network. And the person who solves the difficult mathematical problem first receives a mining reward.

Next, all other network miners will validate the decrypted value and add it to the blockchain once the solution is implemented. As a result, the transaction that just happened is being verified.

Pool mining

Usually, in a blockchain network, a large number of transactions take place each second. Now, to maintain security, the data encrypted in the blocks are quite complex. And decrypting the encrypted data by a single user is very difficult.

So, this type of mining includes numerous users collaborating to approve a transaction. In this, an entire team of miners collaborates to tackle the difficult numerical and computational challenges. Once a transaction is validated, the reward is divided equally among all users.

Cloud mining

As discussed earlier, the mining process requires special collections of hardware and software. Now, using some specialized computer, users also need to deal with various concerns related to it.

For example, electricity or power usage, or connectivity or bandwidth concerns, managing the machinery, etc.

So, another approach to mine blockchain is through cloud mining, which eliminates the need for various pieces of computer gear and software.

Moreover, users can work in peace with cloud mining because they don’t have to worry about various concerns related to managing the systems.

Also, check: Types Of Blockchain

Uses of Blockchain Mining

Till now, we have discussed Blockchain Mining, various types of blockchain mining, and also the complete mining process. Now, in this section, we will look at some of the main uses of Blockchain Mining.

Uses of Blockchain Mining
Uses of Blockchain Mining

Validating Transactions

Blockchain technology is decentralized and is managed by a peer-to-peer computer network. Now, when we are considering the occurrence of a blockchain transaction on the network then, there is no central authority to validate that transaction.

With each transaction in the blockchain, blocks are added in the blockchain. And the whole transaction validation is done through the mining process.

Confirming Transactions

A blockchain transaction is encoded in a block in the blockchain. Now, Miners use the blockchain mining process to verify whether or not a transaction is genuine or not. And transactions are confirmed once it is included in the block.

Securing Network

As we are aware that the Blockchain network is decentralized and there is no central entity managing the network. So, in the event of an attack, fraud, or cheating, the decentralized network makes it difficult to blame anyone.

To safeguard the transaction network, Blockchain miners collaborate. As the number of operators mining the blockchain grows, network security improves.

You may also like to read the following articles on Blockchain technology.

So, in this tutorial, we have learned about the concept of Blockchain Mining. And we have also illustrated the following topics related to Blockchain mining in detail.

  • What is Blockchain Mining
  • Types of Blockchain Mining
  • Process of Blockchain Mining
  • Uses of Blockchain Mining