Like all concepts in the cryptocurrency space, the concept of Ethereum mining is not an easy one to understand and certainly not that intuitive for most people. The term ‘mining’ emerged from analogies drawn between gold and bitcoin, which is considered to be the digital gold of this era. Traditional mining of gold has one
Like all concepts in the cryptocurrency space, the concept of Ethereum mining is not an easy one to understand and certainly not that intuitive for most people.
The term ‘mining’ emerged from analogies drawn between gold and bitcoin, which is considered to be the digital gold of this era.
Traditional mining of gold has one purpose – generation of more gold. It can be very easy to believe that miners in the Bitcoin or Ethereum network are just concerned with creating new coins and keeping it for themselves. However, it is an acute understatement.
Although there is no way of creation of coins rather than the process of mining, miners are extremely crucial to the network for yet another reason.
They help in maintaining the security and the stability of the network. Since Blockchain is a decentralized ledger, the miners come to a consensus as to what transactions are valid and only add transactions that are agreed upon by the network. This prevents fraud and a major problem like tracking of double-spending which no currency before Bitcoin was able to achieve.
We’ve said a lot about miners. But how does the whole mining process work?
The most crucial aspect in all of the mining is hashes, which are everywhere in the network. A hash is a fixed-size alphanumeric string that comes out as a result of a cryptographic hash function. A has had pretty interesting properties. Every input generates a different hash and one cannot determine the input by looking at the hash. Even a small change in the input leads to a completely different hash.
While the word “Block” produces this hash: 211D0BB8CF4F5B5202C2A9B7996E483898644AA24714B1E10EDD80A54BA4B560, the word “Blocks” produces this hash: 1CD5A6687BB76E3926F8C89A9FB290CD17D893CA944899952322D3FB5C9896D3.
These results are according to the SHA256 hashing algorithm used by Bitcoin. However, EThereum uses a different hashing algorithm called Ethash.
Every block on the blockchain contains a block header. This block header is of extreme importance in the process of mining. It contains a version, timestamp, previous block hash, Merkle root, a difficult target, and a nonce.
In the process of mining, miners through their mining hardware try to find out the hash of the block header such that the hash is smaller than the difficulty target. This case is extremely rare and it takes billions of tries to solve the puzzle. The difficulty target is set in such a way that no matter what the computing power is, it takes 12-15 seconds for an Ethereum miner to find a solution to the puzzle and add it to the blockchain.
This process entails a group of miners competing against each other to solve this cryptographic puzzle and the first miner (or ethereum mining pool) to solve it gets the reward. As soon one miner solves the problem and adds the block to the blockchain, other miners start working on the next problem after appending the block to their own blockchain.
This consensus protocol is called Proof-of-Work as it requires miners to give proof of the work that they have performed in order to get the rewards.
Ethereum soon aims to shift its consensus protocol to proof of stake which will have validators instead of miners to secure the network. Moreover, it will not require miners to purchase expensive equipment to solve complex cryptographic problems.