What is crypto mining? How new coins are made and payments are checked
By SendPay Business · · 2 min read
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Crypto mining is the process that checks and records transactions on proof-of-work blockchains such as Bitcoin. Miners use powerful computers to compete to add the next block of transactions, and the winner is paid in newly created coins plus transaction fees.
How mining works
- Miners collect pending transactions into a block.
- Their computers race to solve a hard maths puzzle for that block.
- The first to solve it broadcasts the block, and other nodes check it.
- The winner receives the block reward and the fees in that block.
Why it uses so much energy
The puzzle is designed to be hard, and difficulty rises as more computing power joins the network. That keeps the chain secure, but it means large mining operations use a lot of electricity. The block reward also halves roughly every four years in the Bitcoin halving.
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Mining vs staking
Not every blockchain uses mining. Proof-of-stake chains such as Ethereum pick validators based on the coins they lock up instead of computing power, which uses far less energy.
Where SendPay fits
SendPay does not offer mining. A SendPay platform lets your customers buy, sell and hold crypto next to their cash, with assets held with regulated partners and a trading fee you set.
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Questions people ask
What is a hash function?
How SHA-256 turns data into a fingerprint, and why blockchains need it.
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Spotted a mistake or something out of date? and we'll fix it. How our guides are made
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.