Cryptocurrency mining is the necessary process by which cryptocurrency transactions are verified and added to the blockchain digital ledger. Since cryptocurrency is decentralized and exists apart from traditional banks, miners are needed to ensure the legitimacy of transactions and update the blockchain. Miners compete to solve cryptographic hash puzzles, each associated with a block of transaction data. The first miner to solve the puzzle authorizes the transaction data and earns a small amount of cryptocurrency in reward.
Mining has become extremely competitive, and the barriers to entry can be significant. To be successful miners need powerful computers with specialized hardware, such as a GPU (Graphical Processing Unit) or ASIC (application-specific integrated circuit), to increase their hash power and solve the cryptographic puzzles faster and more frequently. This kind of hardware consumes a large amount of electricity, often at a high cost. Consequently, many amateur miners can't compete with the resources of enterprise mining projects. Additionally, the reward for successful miners becomes smaller as the number of existing assets increases.