To better understand the differences between mining and staking, you must first understand how Proof-of-Work (PoW) and Proof-of-Stake (PoS) work. With Ethereum’s Merge, understanding these topics will be more critical than ever.
How does mining work?
Bitcoin mining
To guarantee that transactions are accurate and added to the blockchain of the cryptocurrency on time, a global network of computers running the code on cryptocurrencies cooperates in a process known as “mining.”
Other cryptocurrencies also similarly reach circulation through mining or staking (explained later in the article). In essence, the network security of the cryptocurrency is maintained via the mining process. Proof-of-Work blockchains rely on mining which is adding new blocks to the blockchain.
Related article: How to mine cryptocurrencies in a bear market
Supercomputers contest to be the first to approve and add a block—a group of transactions—to the blockchain. For instance, Bitcoin miners currently receive transaction fees and 6.25 BTC per block in exchange for their “hard work.” In the past, mining could have been done with a basic computer. Still, as the difficulty of the mathematical problems that must be addressed increased, it has become necessary to use powerful technology and hardware.
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