What happens when crypto coins are mined?

Have you ever wondered what happens when you are mining? Have you? I’ve often wondered what goes on when I’m mining a new coin that’s about to go into circulation. I keep wondering what goes on behind the scenes. If you’ve ever mined any digital currency, you would agree with me that the mining aspect is often mind-boggling, especially for newbies who are just starting out in the crypto space. Let’s dig further into crypto mining and see how it works!

What is Crypto mining?

Crypto mining is not only the process through which several cryptocurrency projects generate new coins; it also verifies new transactions in the blockchain. It makes use of large, decentralized computer networks around the world that secure and document cryptocurrency transactions. When you mine crypto, you contribute to their processing power, and in return, you are awarded with new coins when the mined coins hit the market. The coins are rewarded as an incentive for the miners to maintain the blockchain.

How does Crypto mining work?

Mining crypto is similar to mining precious stones. Mining precious metals gives birth to precious stones like gold, diamonds, rubies, silver, sapphire, etc., while mining crypto releases new coins into circulation on the blockchain.

Crypto mining can be done in two ways.

Proof of Work.

Proof of Stake.

Proof of work

Proof of work, also known as POW, is a way to track and verify the creation of new cryptocurrencies and transactions happening in the blockchain. Crypto coins depend on algorithms of proof of work to maintain their networks.

Miners must show proof of work to win the right to mine a crypto block. The idea is to solve highly complex math problems which is the main work and the solution to the math problems is the “proof”.

The miner who wins by verifying the next block of crypto transactions and earning a reward does that by competing against other miners around the world who use specialized computers to solve the complex math puzzles.

With proof of work, crypto miners use computer tools that are designed to verify crypto transactions and maintain a record of past transactions for the blockchain network quickly. They also make use of crypto-graphic technology which allows anyone to send and receive digital assets.

Pros and Cons of Proof of Work


Popularly used among notable cryptocurrencies.

Good security.

Miners earn from it.

It enables new transactions.


It requires a high level of electricity to run.

makes use of expensive hardware.

Individual miners will find it hard to use.

Proof of stake:

Proof of stake also known as POS. This Crypto mining concept was introduced by Sunny King and Scott Nadal in a whitepaper for PPCoin in 2012. The mining and security in this network are determined by accounts with the biggest stakes in the network; in other words, it is a negotiation process that distributes the authority to approve transactions and add new blocks to a cryptocurrency network to users who own a certain amount of that cryptocurrency. Proof of Stake is more economical than alternative arbitration mechanisms in terms of speed, processing fees, and processing power. Here, there’s no competition, so less energy is used.

Pros and Cons of Proof of Stake


It has fast transactions at all times.

It has low network fees.

It has a low amount of energy.


It has a high level of security risk because people who own 51% of the cryptocurrency control the entire network.

What do you need to mine crypto?

Wallet. You need a wallet because your earnings as a miner will be stored in it. If you are a newbie, a wallet is an encrypted finance app online that allows you to store, transfer, and accept cryptocurrencies. There are different types of wallets.

For phones: Metamask, CoinCircle, Trustwallet, Super Ex, Blocto, etc.

For desktop Windows: Ledger Live, Trezor, Bitcoin Core, Exodus, Electrum, Atomic Wallet, and MyCelium.

Computer equipment.

This is the most cost-effective aspect of mining crypto. The hardware is expensive. You will need a good and strong computer that uses a large amount of electricity to successfully mine crypto. Provisions for mining software are many and are free to download. They can run on Windows and Mac computers. When you are ready to mine your crypto, connect your software to the hardware and start.

Examples of mining hardware are Ebang, Antminer, Minedollars, and AvalonMine. Examples of mining software are ECOS, BeMine, and Kryptex Miner

Mining pool

As a miner, you can choose a mining pool. Each member of a mining pool contributes processing power to the search for a block. If the pool is successful, they will all earn cryptocurrency. They must all show proof of work to earn their coins.

You can join mining pools like

Binance Pool




Is mining legal?

Crypto mining can be legal and illegal at the same time. How? We all know that crypto has been accepted across the world, but it is still a bone of contention in some countries because of its decentralized nature, volatility, and enormous power consumption.

Crypto is restricted in countries like China, Russia, Bolivia, Algeria, Nigeria, and Ecuador because they believe it’s associated with criminal activities and other valid reasons. In other countries like Germany, Finland, France, the United States, Canada, Australia, and the UAE, crypto is widely transacted and adopted as a legal tender.

So mining in countries where it’s outright prohibited or restricted is illegal.

Is Crypto mining profitable?

Crypto mining is not profitable for all miners due to the complicated process and high cost. Not all the miners can afford to pay for the hardware used. Setting up the hardware is costly and needs technical know-how. Profitability is assessed through a cost benefit analysis. The things to consider are the level of electricity consumption, efficiency, difficulty, crypto value, and time taken to complete the mining process. Not all miners can do this or are well equipped with these applications, which makes them earn low money, and this is why miners are recommended to join mining pools.

The downside or disadvantages of mining.

The downsides of mining are always financial and regulatory. Mining is highly risky in terms of finances because you can purchase the hardware and other mining tools and have no return on investment.

Although this risk can be managed by joining mining pools, it still doesn’t guarantee your income. When you want to mine, make sure you are living in a country where crypto is not restricted. Make sure you research your country’s crypto regulations before investing in mining. Another downside of crypto mining is that it requires a high usage of electricity for the computer systems the program needs.


Why do Crypto need miners?

Cryptocurrencies need miners to reduce the risk of getting copied, counterfeited, and having double expenses on the same coins. Mining makes them less expensive and resource-intensive.

Can you mine bitcoin on your iPhone?

Yes, you can mine bitcoin on your Android phone and iPhone. You will need to download the right apps for it. It takes about 10 minutes to mine one block.

How do you join a crypto mining pool?

Joining your preferred mining pool is a simple process. You must have your mining hardware before you can download your mining software. You can choose a free pool or a paid pool.

How much do miners earn?

Crypto miners receive 6.25 bitcoins as their mining reward when they successfully add a block to the blockchain. The earnings are cut in half roughly every 210,000 blocks. Bitcoin traders traded bitcoins worth $125,000 in September 2022.

Why does mining use a lot of electricity?

When Crypto started newly, anybody could simply mining from their PC or laptop. Now, the network is getting larger and more people are mining, the mining system has become more difficult. By the end of 2021 and the early months of 2022, crypto mining was consuming more than 200 terawatt-hours.

On a final note,

Mining is important for the validation and confirmation of new crypto transactions on the blockchain in order to avoid double spending and duplication by copycats. It is also the way to get new coins into the system. Mining is a means to get free coins when these coins being mined finally get into the system. It keeps the system stable and secure. Bear in mind that mining crypto doesn’t necessarily mean that you must earn from it. You can also lose.

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