Process of Cryptocurrency Mining.
                     Complete process 
of Cryptocurrency 
Mining
Cryptocurrency mining
• Cryptocurrency mining is the process in which transactions 
between users are verified and added into the blockchain public 
ledger. The process of mining is also responsible for introducing 
new coins into the existing circulating supply
Source: Google Images
Bitcoin mining
• Bitcoin is the most popular and well-established example of a 
mineable cryptocurrency, but it is worth noting that not all 
cryptocurrencies are mineable. Bitcoin mining is based on a 
consensus algorithm called Proof of Work.
Source: Google Images
How it works?
• A miner is a node in the network that collects transactions and 
organizes them into blocks. Whenever transactions are made, all 
network nodes receive them and verify their validity. Then, miner 
nodes gather these transactions from the memory pool and begin 
assembling them into a block
Source: Google Images
Initial step
• The first step of mining a block is to individually hash each 
transaction taken from the memory pool, but before starting the 
process, the miner node adds a transaction where they send 
themselves the mining reward. This transaction is referred to as the 
coinbase transaction, which is a transaction where coins get created 
‘out of thin air’
Source: Google Images
Hash tree
• After every transaction is hashed, the hashes are then organized into 
something called a Merkle Tree (or a hash tree) - which is formed by 
organizing the various transaction hashes into pairs and then hashing 
them. The outputs are then organized into pairs and hashed once 
again, and the process is repeated until “the top of the tree” is 
reached.
Source: Google Images
Target value
• The target value - also known as the hashing difficulty - is regularly 
adjusted by the protocol, ensuring that the rate at which new 
blocks are created remains constant and proportional to the 
amount of hashing power devoted to the network.
Source: Google Images
Hashing difficulty
• Therefore, every time new miners join the network and competition 
increases, the hashing difficulty will raise, preventing the average 
block time from decreasing.  In contrast, if miners decide to leave 
the network, the hashing difficulty will go down, keeping the block 
time constant even though there is less computational power 
dedicated to the network.
Source: Google Images
Producing a valid hash
• The process of mining requires miners to keep hashing the block 
header over and over again, by iterating through the nonce until 
one in the network miner eventually produces a valid block hash. 
When a valid hash is found, the founder node will broadcast the 
block to the network. 
Source: Google Images
Mining pools
• Miners with a small percentage of the mining power stand a very 
small chance of discovering the next block on their own. Mining 
pools are created to solve this problem. It means pooling of 
resources by miners, who share their processing power over a 
network, to split the reward equally among everyone in the pool
Source: Google Images