What is Proof-of-Work(PoW)?

proof of work

Proof-of-Work involves highly complex mathematical equations that can’t be solved by humans even if they have a calculator. We don’t think even a genius would be able to solve it that quickly. 

So, high-powered computers are used to solve these cryptographic equations. The first ‘miner’ aka computer that solves this equation will get to add new blocks of transactions to the blockchain. When this block is verified by other miners, the ‘winning miner’ gets a compensation for solving the equation. 

It is a pretty long process and it requires a lot of energy resources to conduct this consensus mechanism. If the network becomes too large, transaction times can slow down which is why we can see Bitcoin only able to do 7 transactions per second (tps) while Visa is able to conduct 24,000 tps. 

Big difference! 

However, the advantage of Proof-of-Work is that it is rather secure. In order for a “bad actor” or hacker to gain control of the network, they would have to have access to 51% of the network and computing power. This would require a large amount of energy which would also be quite expensive. 

Key Points

  • PoW requires miners to perform complex mathematical computations to validate transactions and create new blocks.
  • PoW is designed to be energy-intensive, requiring significant computational power and electricity usage.
  • The energy consumption of PoW has been criticized as being unsustainable and contributing to environmental issues.

How Does The Proof-of-Work (PoW) Model Work? 

Every cryptocurrency has a public ledger called blockchain that records all the transactions. Each block in this chain has a specific hash, and to confirm it, a miner must generate a target hash that’s less than or equal to that of the block.

Miners use specialized devices that generate computations at lightning speed to find the target hash. The miner who first finds the target hash gets to update the blockchain and receive rewards in cryptocurrency.

The reason Proof-of-Work is so effective is that it’s challenging to find the target hash but easy to verify it. This makes it almost impossible to manipulate transaction records. So, while the process may be difficult, once a target hash is found, it’s easy for other miners to check it.

Example Of Proof-of-Work with Bitcoin

When a Bitcoin transaction occurs, it undergoes a security verification and is grouped into a block for mining. Bitcoin’s proof-of-work algorithm generates a hash for the block using SHA-256, which always creates hashes with 64 characters.

Miners compete to generate a target hash that’s below the block hash. 

The first miner to find the correct hash gets to add the latest block of transactions to Bitcoin’s blockchain and receive Bitcoin rewards in the form of newly minted coins and transaction fees. Bitcoin has a fixed maximum supply of 21 million coins, but miners will continue to receive transaction fees for their service after that.

The Proof-of-Work algorithm used by Bitcoin aims to add a new block every 10 minutes. To achieve this, it adjusts the mining difficulty based on the rate at which miners are adding blocks. If mining is too fast, the hash computations get harder, and if it’s too slow, they get easier.

In summary, Bitcoin’s Proof-of-Work algorithm ensures that its blockchain remains secure and tamper-proof. Miners are incentivized to compete for rewards by generating the correct hash while ensuring that new blocks are added to the blockchain at a stable rate.

A Brief Overview Of Proof-of-Stake (PoS)

The alternative to Proof-of-Work would be Proof-of-Stake. PoS does not require large amounts of energy. 

Instead it requires a large amount of capital AKA money. 

To participate in Proof-of-Stake, a miner must invest in a certain amount of digital currency. Those currencies would be used to validate the blocks. 

This process is conducted using a weighted algorithm where the staker who has the largest currencies staked and experience is picked.  

When a miner is picked to verify the blocks, they are rewarded with cryptocurrencies. If they verify the block incorrectly however, they could lose their stake. This motivates miners to have good intentions when verifying transactions on the blockchain. 

As you can see, Proof-of-Stake tends to favor those with the most amount of currency staked. Thus, some may say Proof-of-Stake is not as decentralized as it could be however there are many sides that could be looked at.

Proof-of-Work (PoW) vs Proof-of-Stake (PoS)

Energy Consumption

In terms of energy consumption, PoS will definitely take the higher ground. This is because PoW takes a huge amount of energy and most of this is electricity. This is a huge red flag with green warriors who do not agree with the large consumption of electricity and power. For context, it takes 1,449 kilowatt hours (kWh) to mine a single Bitcoin. This is the amount of electricity a single household in the US consumes for 13 years. 

That’s a lot!

With PoS, all you need is the investment of currency and so electric consumption is way less. This is why “The Merge” was significant. Ethereum has become more “eco-friendly” and now uses 99.95% less energy to mine. 


PoW requires miners to solve a cryptographic equation to add blocks to the blockchain. The miners are then rewarded for solving these equations in block rewards or transaction fees. Through this model, the miners are incentivized to act honestly. In addition, it is harder to manipulate the network since a lot of computational power is required to do so. 

With PoS, validators hold and stake their holdings as collateral. The act of staking allows validators to have an interest in maintaining the security of the network. Any malicious behavior can cause their stake to be slashed. 

Proof-of-Work (PoW) Coins You Should Know About

Bitcoin (BTC)

Bitcoin is the first cryptocurrency, which was launched in 2009 and introduced the concept of proof of work. Since then, many other coins have adopted this mechanism for transaction processing.

Litecoin (LTC)

Litecoin, launched in 2011, is one of the earliest altcoins and based on Bitcoin’s code. It offers faster transaction speeds than Bitcoin.

Dogecoin (DOGE)

Dogecoin is a cryptocurrency that started as a joke but quickly gained a loyal following after its launch in 2013. It is based on the Doge meme and also uses proof of work for transaction processing.

Final Thoughts On Proof-of-Work (PoW)

Proof of work was the preferred consensus mechanism for early cryptocurrencies that needed a secure and decentralized way to process transactions. While proof of stake has emerged as a less energy-intensive alternative, many major coins still use proof of work to maintain the integrity of their blockchain.

In summary, proof of work has played a crucial role in the development of cryptocurrency, from Bitcoin to newer coins like Dogecoin. While there are other consensus mechanisms available, proof of work continues to be widely used in the cryptocurrency world.

Check out our list of Proof-of-Work coins here!

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