The Different Ways to Mine Cryptocurrencies

When people talk about cryptocurrency mining, it is common to picture powerful computers solving mathematical calculations. That model exists, but it is only one of several ways to validate transactions and keep a blockchain secure. Over time, different mechanisms were created to balance security, energy efficiency, decentralization, and user participation.

Proof of Work (PoW) — security through computing power

Proof of Work is the model used by Bitcoin (BTC) and, historically, by Litecoin (LTC). In it, computers compete to solve complex mathematical calculations. Whoever wins validates the block and receives the reward. The biggest benefit of PoW is extreme security: attacking the network requires very high computational and energy cost, which makes fraud economically unfeasible. On the other hand, it is an expensive model, with high energy consumption and technical barriers to entry. It prioritizes maximum security, even at the expense of efficiency.

Computers compete to solve complex mathematical problems. The first to solve it validates the transaction block and receives a reward.

🔝Advantage:
High security and strong resistance to fraud.

〰️Challenge:
High energy consumption and the need for specialized hardware.

Proof of Stake (PoS) — active participation and efficiency

In Proof of Stake, used by networks such as Ethereum (ETH) after the Merge, Cardano (ADA), and Solana (SOL), there is no competition for computing power. Instead, users lock their tokens in staking to participate in validation. The larger and more consistent the participation, the higher the chance of validating blocks and earning rewards. The main benefit of PoS is energy efficiency and incentive alignment: those who help protect the network have a direct interest in its stability. Models like this also inspire staking structures such as those used with the INKY Token, where the user stops being only a passive investor and becomes an active participant in the ecosystem.

The larger and more consistent this participation is, the higher the chance the user will be selected to validate blocks.

🔝Advantage:
Lower energy consumption and greater efficiency.

〰️Challenge:
Power concentration among those who hold more tokens.

Proof of Capacity (PoC) — storage based efficiency

Proof of Capacity is used by projects such as Burstcoin (BURST). In this model, the main resource is not processing power, but disk space. Before mining, users prepare their drives with specific data, and during validation, whoever has the most suitable data validates the block. The benefit of PoC is the reduction in energy consumption and the reuse of common hardware. It is a more accessible model in energy terms, although less popular and with lower market adoption.

Participants use free hard drive space to store data that helps validate blocks.

🔝Advantage:
Lower energy cost compared to PoW.

〰️Challenge:
Still not widely adopted and dependent on specific infrastructure.

Proof of Burn (PoB) — commitment through scarcity

Proof of Burn appears in projects such as Slimcoin (SLM) and in occasional mechanisms used by some blockchains for supply control. In this model, participants burn coins by sending them to unrecoverable addresses as proof of commitment to the network. The benefit is creating programmed scarcity and aligning long term incentives: those who sacrifice value now gain influence later. Although it is not widely adopted as a primary mechanism, PoB is useful for understanding burn dynamics that also appear in modern tokens, including complementary economic strategies.

This burn acts as proof of commitment to the network, granting the right to validate blocks.

🔝Advantage:
Reduces energy consumption and creates asset scarcity.

〰️Challenge:
Requires trust that the sacrifice will be rewarded in the long run.

Proof of Authority (PoA) — reputation based speed

Proof of Authority is used by networks such as VeChain (VET) and BNB Smart Chain (in early versions and parallel networks). Here, validators are known entities, pre approved, with their reputation at stake. The core benefit is high speed, low cost, and predictability. In exchange, there is less decentralization. This model is common in blockchains aimed at corporate use, logistics, supply chains, and hybrid applications, where institutional trust matters more than full anonymity.

It is common in corporate blockchains or private networks.

🔝Advantage:
High speed and predictability.

〰️Challenge:
Lower decentralization.

What all of these models have in common

Despite the technical differences, all of these mechanisms exist to solve the same problem: creating consensus and trust without relying on banks, governments, or central intermediaries. Each blockchain chooses its model based on priorities such as security, efficiency, decentralization, or governance. Understanding these differences helps you see that cryptocurrencies are not all the same, each one reflects technical and economic choices that shape its entire ecosystem.