Mining from 50K-Feet: What, Who & Why
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Mining and Miners
Mining is a consensus-building process. It’s how cryptocurrency networks stay secure and keep track of the network’s transaction history.
Networks are a bunch of interconnected computers that are constantly sharing information to ensure everyone’s records are up-to-date, accurate, and honest. Miners are like worker bees, validating these records (transactions) as true and storing them for safe keeping.
Just like bees need honey and pollen to build and protect the hive, miners need energy and computational power to connect to and secure the network. As a reward for their efforts, bees get shelter and protection. Similarly, miners are rewarded tokens (the cryptocurrency units) in exchange for making the network run how it’s designed to run.
Mining Ain’t Cheap
Miners are selfish. Their motivations to validate transactions and secure the network are not altruistic. Those are the table stakes to play the game. The real motivation is a chance to get a spoonful from the honey pot — the mining reward.
And for good reason. Mining ain’t cheap. Buying the miner (computer) is only the first step. Actually doing the mining (that is, dedicating computational power) is where the real costs are seen as energy bills add up.
The bigger the network, the higher the reward. The higher the reward, the more miners that want a piece of the action. More miners means more competition. And more competition means more computing power required to play the game.