👷‍♀️What is mining?

Crypto mining is the process of producing digital tokens by consuming energy. In this post, we'll dig into details and unpack what mining means for you, one concept at a time.

Producing tokens

Tokens are digital assets. Like the coins you might carry in your pocket or trading cards you might collect, tokens are digital objects you can own, trade, and transfer over the internet. Blockchains allow anyone with a computer to create their own tokens and share them with the world.

Tokens can represent anything – from concert tickets, to ownership in a company, to fun jokes or memes. When it comes to mining, the thing we care about is not so much what the tokens represent per se, but rather how they are produced. Mining is a special process for producing tokens where issuance is managed by computer code and based on how much energy a user has provably consumed.

Consuming energy

Energy consumption grounds tokens in the physical world. When a token has a material cost of production measured in energy, it means a miner has to sacrafice something of real economic value to acquire it. To miners, a token must be worth at least the energy required to produce it – otherwise, they simply wouldn't be mining. This is the basic principle of exchange that underlies all market theory.

A token's cost of production can be a useful data point for estimating its value relative to other goods. It is important to note that production costs are not the only factor which can influence an asset's market price. Prices are free floating values, subject to speculation, and set by the dynamic forces of supply and demand. Mining simply helps market particpants reason about how much energy other people are willing to sacrifice in order to acquire a particular token.

Proof of work

Computation is a proxy measure for energy consumption. If a token has real economic value – in part, because it has a real energy cost – it's important we can prove the energy cost has actually been paid. To do this, your computer is given a computational puzzle it can only solve by generating thousands of potential solutions and checking each one for correctness.

Each solution costs a small, known quantity of energy to generate. Based on the difficulty of the puzzle, we can estimate how many potential solutions your computer will need to generate before it finds one that is valid. Simply by presenting a valid solution, you can prove your computer must have done the computational work to find it and therefore consumed energy. This is where the phrase "proof-of-work" comes from.

Fair distribution

Powx guarantees everyone can participate in mining and win. It does this by using a novel fair mining protocol with non-exclusive rewards. This means if one miner wins, it doesn't prevent another miner from winning also. Rather than setting up every miner in a winner-take-all competition against one another, Powx gives each miner their own personalized computational challenge. As long as you provide a valid solution to your own individual puzzle, Powx guarantees your will earn a piece of the supply. Since no miner can be censored from the network and all valid solutions are non-exclusive, starvation is avoided.

This algorithm is what makes Powx unique and unlike any other digital token in the world. It has never been tried before in the history of cryptocurrency and is only possible due to the recent breakthroughs of high performance blockchains like Solana.

Conclusion

Mining is an algorithmic alternative to central banking. Where traditional fiat currencies are managed by unelected officials and opaque boards of central bankers, mining offers an alternative form of currency control that is codified, predictable, testable, and open-source. It promises to level the playing field in a system that has historically been biased in favor of the world's largest banks and corporations. Powx opens the door to everyone and offers a digital currency that regular, everyday people can mine and win.