A Glossary of Common Crypto Mining Terms.

Hash Rate

1. Hash rate measures the computational power used by a mining network to process transactions and secure the blockchain.

2. It is expressed in hashes per second—common units include MH/s, GH/s, TH/s, and PH/s.

3. A higher hash rate indicates greater network security and resistance to malicious attacks like double-spending.

4. Individual miners contribute to the overall hash rate through specialized hardware such as ASICs or GPUs.

5. Fluctuations in hash rate often reflect changes in miner participation, electricity costs, or coin price volatility.

Proof of Work

1. Proof of Work (PoW) is the consensus mechanism that requires miners to solve complex cryptographic puzzles.

2. Solving these puzzles validates new blocks and adds them to the blockchain ledger.

3. PoW demands significant energy consumption, which has led to ongoing debates about environmental impact.

4. Bitcoin, Litecoin, and Ethereum Classic rely on PoW, though Ethereum transitioned away from it in 2022.

5. The difficulty adjustment algorithm recalibrates puzzle complexity every 2016 blocks on Bitcoin to maintain consistent block times.

Mining Pool

1. A mining pool is a collaborative group of miners who combine their hash power to increase the probability of finding a block.

2. Rewards are distributed among participants based on contributed work, usually measured in shares.

3. Centralized pools can exert influence over network governance if they control more than 50% of total hash rate.

4. Pools charge fees ranging from 0.5% to 3%, deducted before distributing payouts to members.

5. Some pools offer features like real-time statistics dashboards, automatic payout thresholds, and stratum protocol support.

Block Reward

1. Block reward is the amount of cryptocurrency awarded to the miner who successfully adds a new block to the chain.

2. It consists of newly minted coins plus transaction fees included in that block.

3. Bitcoin’s block reward halves approximately every four years—a process known as the halving event.

4. As of 2024, the Bitcoin block reward stands at 6.25 BTC, down from 12.5 BTC after the 2020 halving.

5. Miners increasingly rely on transaction fees as block subsidies diminish over time.

Difficulty Adjustment

1. Difficulty adjustment ensures blocks are mined at regular intervals despite changes in total network hash rate.

2. Bitcoin adjusts difficulty every 2016 blocks, roughly every two weeks, based on actual time taken versus expected time.

3. If blocks are found too quickly, difficulty increases; if too slowly, it decreases.

4. This mechanism maintains predictable issuance schedules and prevents inflationary pressure from rapid mining.

5. Sudden hash rate drops—such as those caused by regulatory crackdowns—can trigger sharp downward difficulty revisions.

Frequently Asked Questions

Q: What is a nonce in mining?A: A nonce is a random number miners adjust repeatedly during hashing attempts until the resulting hash meets the current difficulty target.

Q: Why do some miners switch between cryptocurrencies?A: Profitability shifts due to fluctuations in coin price, network difficulty, electricity cost, and exchange liquidity drive miners to pivot to more lucrative chains.

Q: How does orphaned block differ from stale block?A: An orphaned block lacks a valid parent reference and cannot be integrated into the main chain; a stale block was valid but discarded because another miner broadcast a competing block first.

Q: Can CPU mining still be profitable today?A: CPU mining remains viable only for privacy-focused coins like Monero, which implement ASIC-resistant algorithms such as RandomX.