Commonly known as “mining”, Proof of Work (PoW) is a consensus mechanism used in blockchains to validate newly-added transactions. A critical component of Bitcoin and other blockchains, PoW ensures that all transactions recorded are secure and transparent.
In PoW, network participants, also called “miners”, compete to be the first to solve a complex cryptographic problem with the use of specialized hardware. The first to solve the problem is rewarded with cryptocurrency and can add a new block of verified transactions to the blockchain. Once the new block is added, the transaction is considered complete and the solution to the problem is broadcasted to other miners.
Those with more computational power have a higher chance of solving the problem, successfully updating the blockchain, and receiving the reward in the form of coins and transaction fees. Given that PoW requires the use of significant computational power, some environmentalists are concerned about its environmental impact.