Cryptomining

Cryptomining is the process of processing, securing, verifying and synchronizing all transactions related to cryptocurrencies.

How does cryptoming work?

Cryptocurrency miners can publish and process cryptotransactions individually or in mining pools by providing computing power for complex tasks. Transactions are legitimized by miners solving numerical problems using their mining computers. It is a competitive process for which miners receive cryptocurrencies, such as digital currencies exchanged through a computer network independent of a central authority.

In a mining pool, the reward is distributed according to the computing capacity of each member. New transactions are recorded in the blockchain (a virtual ledger). The inclusion of transactions in the blockchain is confirmed by creating a so-called block, for instance, a record of when and how the transaction was entered into the blockchain.

Cryptocurrencies are then credited to miners' electronic wallets (crypto wallets).

What are the security risks associated with cryptomining?

•Hackers often use malware applications to illegally mine cryptocurrencies on victims' devices without the users' knowledge.

•Cryptomining can significantly reduce device performance, leading to slower operation, increased power consumption and reduced hardware lifespan.

•Illegal cryptomining can lead to excessive energy consumption, which can increase the electricity costs for victims.

•Hackers can use cryptomining malware to infiltrate a system and perform other malicious activities, such as data theft or espionage.

•Hackers can use cryptomining as part of a broader attack that also includes social engineering to convince users to download and run malicious software.

Cryptomining and the Environment

Cryptomining's energy consumption has sparked debates about its impact on the environment. The energy intensity of mining, particularly bitcoin, has led to concerns about carbon footprint and sustainability. In response, some projects are exploring alternative consensus mechanisms, such as Proof of Stake (see below).

Related terms

•Proof of Work (PoW) is how miners verify transactions and prove that they spent the computing power to create blocks.

•Proof of Stake (PoS) is another method of verifying cryptocurrency transactions. In this case, transactions are not verified by miners but by randomly selected validators. Validators can be users who pledge certain cryptocurrencies (stakes), guaranteeing they will act honestly.

•Hashing power: Miners deploy specialized hardware with enormous computing power. The more computing power a miner has, the greater the chance of getting a reward.