What is Proof of Work?
Proof of Work (also known as PoW) is a system which secures blockchain networks by requiring participants, known as miners, to use computational power to validate transactions. Miners earn a reward—called a block reward—when they successfully validate a set of transactions, known as a block.
Bitcoin is the most well known cryptocurrency that uses Proof of Work. Some other notable examples are Dogecoin, Monero, Litecoin. Even Ethereum started as a Proof of Work network, although Ethereum transitioned from Proof of Work in 2022 to a different consensus mechanism called Proof of Stake.
Proof of Work is recognized as a type of consensus mechanism - a method blockchains use to validate transactions. Originally conceived in 1993, Proof of Work was first used to prevent email spam before being adopted for cryptocurrencies. Other well-known types of consensus mechanisms are Proof of Stake and Proof of History.
Proof of Work enables decentralized security by allowing anyone with sufficient computing power who is willing to contribute in securing the network. It’s considered the most secure consensus mechanism because attacking it requires an enormous and exponentially growing amount of computing power.
Although incredibly secure, Proof of Work has become increasingly less popular for newer blockchains due to the difficulty that comes with scaling Proof of Work blockchains. To learn more about this, please read our article called What is the blockchain trilemma?
How Proof of Work secures transactions
Proof of Work requires miners to compete in making billions of random guesses per second to find a specific number (known as a cryptographic hash) that meets the network’s criteria.
While Proof of Work is often described as solving complex puzzles, it’s actually more like a massive guessing game. The more computing power a miner has, the more guesses they can make, similar to buying more tickets in a lottery. It’s simply about making enough guesses, fast enough, to find the correct solution.
Once a miner finds a valid solution, they broadcast it to the network, and after verification, a new block of transactions is added to the blockchain. The successful miner is rewarded with newly minted cryptocurrency and transaction fees from all the transactions contained in that block.
As more miners join the network, finding the correct cryptographic hash becomes increasingly difficult. This requires more energy and stronger computational power as competition grows.
To keep block rewards distributed fairly, Proof of Work cryptocurrencies use a mechanism called difficulty adjustment. This automatically adjusts the mining difficulty based on the total computational power in the network, ensuring blocks are mined at a consistent rate.
At its core, Proof of Work is a system which prevents funds from being spent twice at the same time (called double-spending). Every block is validated by a miner and broadcasted it to a global network of computers called nodes. You can view a real-time list of Bitcoin nodes on this page.
A node is any computer which runs the Bitcoin software. While most nodes don’t get paid, they are a critical part of securing the network. Every miner is a type of node, but not every node is a miner.
One of the key benefits of PoW is that it eliminates the need for a central authority to process transactions. Anyone is able to download the blockchain software, run it and join the network as a participant. No individual is able to change the state of the network.
Advantages and disadvantages of Proof of Work
Proof of Work is a complex topic which can be viewed from different perspectives - this means that some advantages of Proof of Work are also disadvantages depending on the context.
Proof of Work offers strong security. Thanks to the difficulty adjustment, it’s extremely unlikely that any single entity could gain majority control over a well-established PoW network. Smaller networks, however, are more vulnerable. We’ll cover this in more detail in the next section.
Unlike other consensus methods, Proof of Work grounds digital value in tangible energy costs. Unlike many cryptocurrencies whose value is based purely on network activity, PoW ties value to the energy spent on mining. This idea has been popularized by Bitcoin advocate Michael Saylor, who describes Bitcoin as
The most well-known criticism of Proof of Work is its energy consumption. Bitcoin and other PoW cryptocurrencies require massive computational power, and this demand increases as more miners join the network. While Bitcoin proponents argue that this energy use is justified for securing a decentralized system, it remains a key point of debate.
Another drawback is that smaller PoW networks are less secure. Bitcoin is extremely secure because of its vast number of miners and high computational power. However, a newly created PoW network with just a few participants would be easy to attack, as it wouldn’t be decentralized enough to resist manipulation.
The future of Proof of Work
Bitcoin mining has led to innovative developments in the energy sector, particularly in regions with limited access to electricity.
While some view Bitcoin mining as an energy drain, it has actually helped bring power to areas that previously had none. In parts of Africa, for example, mining is being used to support growing electrical grids—allowing villages to generate income from both Bitcoin mining and selling excess electricity.
Some Bitcoin miners set up operations near stranded energy—power that can’t be easily sold or transported because it’s in a remote location. Instead of letting this energy go to waste, miners use it to power their equipment, which can create new income sources and reduce overall energy waste. For example, some oil producers capture the natural gas they’d normally burn off (flare) and use it to mine Bitcoin instead, turning what was once pollution into a productive resource.
Layer 2 solutions like the Lightning Network allow protocols to operate on top of existing Proof of Work blockchains without the high level of energy required to process individual transactions. This makes Proof of Work blockchains much more usable in everyday life, reducing the energy cost of smaller transactions while benefiting from the underlying security of the network.