What Does Cryptomining Mean?

Cryptomining is the process of validating a cryptocurrency transaction. Cryptocurrencies like Bitcoin use distributed public ledgers to record all financial transactions. Each transaction is linked to the previous and subsequent transactions, which creates a chain of time-stamped records called a blockchain.


Because the distributed ledger is public, each record needs to be validated in order to prevent fraudulent transactions. Validation involves solving a complex mathematical problem that is difficult to solve, but easy to verify.

A network of computers called cryptominers compete to solve the problem first. The computer (miner) that solves the problem first earns the right to post the transaction to the ledger and gets a financial reward, which is typically paid in cryptocurrency.

Although anyone can become a miner, the cost of the hardware and energy required to be competitive and solve complex mathematical problems first can be a big barrier to entrance. Miners can hire a black market botnet, but a more positive solution is for miners to use cloud services.

Techopedia Explains Cryptomining

Cryptomining was introduced in 2009 when Satoshi Nakamoto, (which is a pseudonym,) invented Bitcoin, the first implementation of a decentralized cryptocurrency. Nakamoto used cryptomining proof of work (PoW) to secure the public ledger. Records are linked using cryptographic hashes to prevent them from being changed.

As the competition within mining has increased, the problems used to validate transactions have become more complex. The mathematical problems used for proof of work (PoW) are designed to be nearly impossible to solve without using brute force. Brute force requires the computer to try multiple combinations of solutions until by chance one solution works.

One of the most well-known PoW functions is called Hashcash. It is based on SHA2 cryptographic hashes. Hashes are encryptions that are easy to verify if you have both the key and the message, but nearly impossible to solve without a key. Full hash inversions have 2255 different possible solutions, which is difficult to feasibly solve with brute force. Hashcash uses partial hash inversions to create the PoW problems.

Cloud mining allows a person to use third-party cloud mining websites to rent dedicated mining machines, called rigs. The renter is allowed to keep any cryptocurrency a rig mines, over and above the cost of the maintenance of the rig.

As with any money-making venture, eventually a criminal element will find a way to exploit it. With cryptomining, cybercriminals have devised ways to use malware to mine using other peoples’ networks, a method called “cryptojacking.” This can result in slower, less efficient computing power for the network’s actual use, damage to equipment not designed to process the level of work required to mine and a staggering power bill for the victim.

Experts advise not using the dark web for cryptomining because the laws governing cryptomining vary internationally. In some juristictions, the mining itself is legal, however obtaining a permit to draw the amount of power needed can be difficult, illegal or impossible to obtain.


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Margaret Rouse
Technology Expert

Margaret is an award-winning technical writer and teacher known for her ability to explain complex technical subjects to a non-technical business audience. Over the past twenty years, her IT definitions have been published by Que in an encyclopedia of technology terms and cited in articles by the New York Times, Time Magazine, USA Today, ZDNet, PC Magazine, and Discovery Magazine. She joined Techopedia in 2011. Margaret's idea of a fun day is helping IT and business professionals learn to speak each other’s highly specialized languages.