What is Proof of Work? And how does it affect mining?

This is not your average analytical article about what is what. It is more of an easy way to “decrypt” the mystery behind the blockchain consensus mechanism, in a way that presents easy-to-read and fun-to-learn material.
We will try to keep it simple, visual, and explanatory, without getting you lost in the complexity of purely technical details.
Please feel free to leave a comment or a suggestion below, or should you have any related question.

So, if you ended up here, you sure have been doing extensive research on cryptocurrencies, ICOs you have been keeping an eye on, or on surprisingly well-performing altcoins on exchanges. It can be quiet frustrating to be going through all kind of highly specialized and overwhelmingly informative writings about how this whole thing even works.

But first things first.

In this journey throughout the crypto-world you finally embarked in, and before quitting your job and raising that middle finger at your boss’s face, you better get back to fundamentals.

For those Satoshis you claimed in online faucets, won’t make you Gucci Mane rich. And that “superior” whistle you are blowing, won’t bring you Kylie Jenner running, but is more likely to get you hit by an empty Soda can, breaking through the window, and coming from your next door neighbor with anger management issues.

gucci mane
Meanwhile, from Gucci Mane’s recent wedding… I know… It made me “stutter” too

Alright, back to business now.

I am quite sure that you may have come across a recurrent term: Proof of Work, a.k.a., PoW. Let’s begin by trying to break it down for you.

Proof of Work (PoW)

PoW is a protocol (or system), that has the main purpose of deterring cyber-attacks. Those threats are likely to come from a distributed denial-of-service attack (DDoS). Or simply from spams that may jeopardize a company’s network, after the night shift front office guy, eagerly clicked on the “hot single chicks around you” fake online add.

Actually, the concept dates from 1992, and was first applied to money by Hal Finney in 2004. Finney is the first ever person to have received a Bitcoin transaction. And also my top pick for the “who the real Satoshi Nakamoto is” unresolved mystery.

To protect its blockchain, Bitcoin implemented a PoW system known as Hashcash developed by Adam Back. Hashcash is responsible for securing the mining process.

Adam Back
Adam Back, the cryptographer behind Bitcoin’s PoW system, Hashcash

To sum it up, PoW is the validation of a work that already occurred and a proof that it was handled correctly.

Now how does all of this benefit a blockchain?

In Bitcoin’s whitepaper Satoshi Nakamoto (Do not email him, he won’t reply. And do not beg him for free Bitcoins. I “heard” that he won’t reply either) had the brilliant idea to introduced PoW to create distributed trustless consensus and solve the double-spend eventual problem.

Satoshi Nakamoto states:

We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work.

So, the PoW is a requirement to validate a long and hard enough computer calculation called mining, that needs to be performed in order to create a new group of combined transactions called blocks, on a distributed ledger called the blockchain.

Hold on, what is mining?

Well, this kind of mining is not necessarily performed while wearing security helmets and safety goggles. Unless you are interestingly funny. Mining in cryptocurrencies vocabulary, is performed to verify the legitimacy of a transaction, and for creating new digital currency units by rewarding miners for their efforts. When a transaction occurs somewhere in the world, that’s what happens:

  • Thousands of transactions come together into a block
  • Miners compete to verify the legitimacy of transactions within each block; by solving a mathematical problem; the proof-of-work
  • Amounts of digital currency are given as a reward to the first miner who solves each block problems
  • Valid transactions are stored in the public blockchain
  • Then a new cycle begins.


In other words, the mining process is an operation of inverse hashing: it determines a number (called nonce) so that the cryptographic hash algorithm of block data, results in less than a given level of difficulty, or threshold.

This threshold sets the competitive nature of mining. The more computing power is added to the whole network, the higher this level increases. This will eventually increase the number of calculations needed to create a new block.

This method also increases the cost of the block creation, pushing miners to improve their mining efficiency or hash power, in order to maintain a profitable mining operation. A new block is generated every 10 minutes, and this parameter is updated approximately every 14 days. Miners usually organize into mining pools, in order to concentrate their efforts on solving the increasing difficulty of a given block.

Keep in mind that this distributed consensus mechanism or PoW, is not only implemented into Bitcoin’s blockchain. Ethereum, Monero, Litecoin and so many other digital currencies actually adopted this protocol.

Now, do not try to use your poor ten years old laptop for mining purposes. You will only destroy it, and pay an offensively expensive electricity bill. Besides, you won’t be able to compete with that.

Mining Farm

Am not speaking of the obviously happy guy. Am speaking about his arsenal of ASICs (or Application Specific Integrated Circuits).

What? ASICs? Go google that already!