Security through computation.
HOW IT WORKS
Participants compete to find a value producing a hash below a target, which requires repeated guessing.
WHAT FINDING IT PROVES
That substantial computation was performed.
WHY THAT SECURES THE CHAIN
Rewriting history requires redoing that work for every subsequent block, faster than the network extends it.
WHAT DIFFICULTY ADJUSTMENT DOES
Changes the target so blocks are produced at a consistent rate regardless of total computing power.
WHAT MINING REWARDS ARE
Newly created units, plus transaction fees.
WHAT THAT INCENTIVISES
Participation, and honest behaviour, since attacking devalues the holdings.
WHAT IT COSTS
Electricity, substantially.
WHY THAT IS THE PRINCIPAL CRITICISM
The energy consumed is the security mechanism, not a side effect.
WHAT DEFENDERS ARGUE
That the cost is what makes the security real, and that generation sources vary.
WHAT MINING POOLS ARE
Participants combining effort and sharing rewards.
WHY THEY MATTER
They concentrate block production, even where individual participants are many.
WHAT TO EXAMINE
The distribution of block production across pools.
WHAT SPECIALISED HARDWARE CHANGED
Mining became industrial, and individual participation became impractical for major networks.
WHAT THAT MEANS FOR ANYONE CONSIDERING MINING
Profitability depends on electricity cost, which is unfavourable in most of this region.
