What is cryptocurrency mining?

As we mentioned in the section of “six layers of blockchain”, that incentive layer of the blockchain mainly includes the issuance system and distribution system of economic incentives, its function is to provide incentive measures to encourage nodes to participate in the security validation in the blockchain, incorporate economic factors into the blockchain technology system, motivate nodes that participate in the bookkeeping in compliance with the rules, and punish nodes that fail in complying with the rules.

Cryptocurrency mining, in simple terms, is the process by which individuals use their devices to perform "works" that support blockchain networks in order to receive cryptocurrency as rewards. Cryptocurrency mining revenue mainly comes from two aspects: first, miners are rewarded for mining new blocks, and second, they make revenue from rewards of transaction commissions.

This process is achieved with mining devices (ASIC mining machine, GPU mining machine, etc.) and consumes electric power to run the mining machine and mining program. The "mining devices" are often referred to as mining machines, and the people who maintain the mining machines are called "miners" and are rewarded cryptocurrency as "mining revenue."

Due to the high noise and power consumption of mining machines, and their need for maintenance by professionals, most miners will choose a professional mining farm for hosting mining machines. In addition, as the probability of block rewards is low by mining alone, miners generally choose to access the mining pool, gather hashrate to package blocks together, and obtain rewards according to the revenue model.