1
Proof-of-work uses cryptographic puzzles (denoted as X) that require a specific amount of computational work to solve, yielding a solution Y.
2
The density of solutions in Bitcoin is approximately 1 in 2^70, meaning miners must try numerous random values of Y until they find a valid one.
3
The first miner to find a valid solution Y publishes the new block and receives mining rewards (e.g., 12.5 Bitcoins in Bitcoin, 5 Ethers in Ethereum).
4
Mining power and energy consumption are theoretically bounded by the financial rewards, leading to massive energy expenditure comparable to entire countries.
5
In reality, mining power has become centralized, with a small number of mining pools (like BTC.com and AntPool) controlling the majority of the network's hash rate.
6
Alternative consensus mechanisms are being explored to reduce energy waste, including Proof of Space, Proof of Stake (using coin collateral and slashing), and Quorum Systems (like Stellar).