How crypto mining works

This guide explains what crypto miners do and why: how transactions become blocks, what a hash and a nonce are, how difficulty keeps blocks on schedule, where the reward comes from and why most people mine in a pool. Blocknet is the worked example throughout, so every number is a real one you can check.

What is crypto mining?

Mining does two jobs at once. It orders transactions, so everyone agrees which payment came first, and it issues new coins on a fixed schedule, so nobody has to be trusted to create them. Bitcoin introduced the idea in 2008, and many coins use it today, including Blocknet. Some chains, such as Ethereum since 2022, use proof of stake instead; proof of work vs proof of stake compares the two.

What goes into a block?

A block is a batch of transactions plus a short header that describes it. Blocknet’s block header has seven fields:

The previous-hash field is what makes a chain. Each block points at the one before it, so changing any old transaction would change that block’s fingerprint and break every link after it. The first transaction in each block is the coinbase, the one that pays the reward to the miner who found it.

How does a miner find a block?

A hash function turns any input into a fixed-length number that looks random. Change one bit of the input and the output changes completely. Treat that output as a huge number: if it is at or below the target, the block is valid. A lower target means fewer winning hashes, so more attempts on average.

On Blocknet, each attempt is one Argon2id hash. The 8-byte nonce is the password and the rest of the header is the salt, and every hash works through 2 GiB of memory before it produces a 32-byte result. When a miner finds a hash at or below the target, it sends the block to the network. Every node repeats that one hash to confirm it, which takes a fraction of the work that went into finding it.

The Argon2id explainer goes through each step of that hash and why it needs so much memory.

What is mining difficulty?

Difficulty is the number that sets the target. On Blocknet the target is (2^256 − 1) divided by the difficulty, which means the difficulty is roughly the number of hashes the whole network needs, on average, to find one block.

That gives you a quick way to read the network. Blocknet aims for one block every 300 seconds, so network hashrate is about difficulty ÷ 300. As an example, a difficulty of 6,000,000 would mean the network is making about 20,000 hashes a second.

The network adjusts difficulty to keep blocks on schedule as miners come and go:

• Bitcoin targets ten-minute blocks and recalculates difficulty once every 2,016 blocks, about every two weeks.
• Blocknet targets five-minute blocks and recalculates difficulty after every block with LWMA, a linear weighted moving average. It looks at the last 60 blocks and gives the most recent ones the most weight, so it follows changes in hashrate quickly: the whole window covers about five hours of blocks.

LWMA also limits how much one odd block can move the result: each block’s solve time counts as at least 1 second and at most 1,800 seconds, six times the target. If blocks come in faster than every five minutes, difficulty rises; if they come in slower, it falls.

How do miners get paid?

Each block creates new coins in its coinbase transaction. On Blocknet, the coinbase has exactly one output, worth exactly the block reward, paid to the address the miner chose. The genesis block held no transactions at all, so every coin in circulation was mined.

The reward follows a published schedule. Blocknet’s started at 723.25 BNT per block and decays smoothly, stepping down once every 30-day month of 8,640 blocks. Emission reaches about 100 million BNT after four years, and from then on every block pays a permanent tail reward of 2 BNT, so miners always have something to mine for.

Mined coins wait 60 blocks, about five hours, before they can be spent. That pause lets any brief split in the chain settle before a new reward can be spent.

Why do most miners join a pool?

A pool combines many miners’ hashrate so the group finds blocks often, then splits each reward by the work every member contributed. Solo, a small miner might wait days or weeks for a whole block; in a pool, the same hashrate earns a steady stream of smaller payments.

The arithmetic shows why. Blocknet makes 288 blocks a day, so your expected solo blocks per day are 288 × (your hashrate ÷ network hashrate). If your machine is one thousandth of the network, you find about 0.29 blocks a day on average, one block every three and a half days, though the real gap varies from block to block.

A pool measures your work with shares. A share is a hash that meets an easier target the pool sets for your connection. Every share counts toward your part of the reward, and a share that also meets the network’s full target is a real block, which the pool submits to the blockchain. On bntpool.com:

• Share difficulty adjusts per connection, aiming for about ten shares every five minutes, so fast and slow machines both report work regularly.
• Rewards are split with PPLNS over a six-hour window: each block’s reward goes to the shares submitted in the six hours before it was found.
• Payouts start at 0.1 BNT once a block is 60 blocks deep.

If you run your own node, you can also mine solo and keep every block you find. The mining guide covers both.

What decides how fast you mine?

The hash function decides which hardware does well. Bitcoin’s SHA-256 needs almost no memory, so specialized chips called ASICs do most Bitcoin mining today. Blocknet chose Argon2id, a memory-hard function that is designed to resist ASICs: every hash fills 2 GiB of RAM, so memory size and memory bandwidth set your speed.

That changes the arithmetic for an ordinary computer:

• RAM sets the thread count. Each mining thread needs its own 2 GiB arena, so a 16 GB machine runs about six or seven threads after leaving room for the system.
• Memory bandwidth sets the total speed. Each hash writes about 2 GiB and reads about 2 GiB, so a machine that moves memory faster finishes more hashes per second.
• CPUs and GPUs can both mine. On Windows and Linux, seine mines on the CPU and every NVIDIA card at the same time, and the hashrates add up.

The best result seine has measured is 49.4 H/s on an AMD EPYC Zen 5 server (EPYC 9R45, 32 threads), and an Apple M4 Max MacBook Pro reaches 30.9 H/s. The hardware guide has results for every generation tested, and the guide to CPU mining in 2026 explains why memory-hard coins suit ordinary processors.

Who keeps the chain honest?

Every node checks every block: the hash meets the target, the transactions are valid and the reward is exactly right. A block that fails any check is rejected, however much work went into it.

When two miners find a block at almost the same moment, the chain briefly splits. Blocknet nodes follow the chain with the most total work, the sum of every block’s difficulty, so the split resolves as soon as the next block lands on one side. That is why wallets count confirmations: on Blocknet, 10 confirmations (about 50 minutes) count as safe, and no node will reorganize more than 100 blocks deep.

Try it on your own computer

Mining Blocknet takes three steps: get an address, download seine, run it and accept the default pool, bntpool.com. Seine picks its thread count, CPU kernel and memory layout while it mines, so you can watch your first shares arrive within minutes.