The term used to describe the process of proof-of-work computation in a cryptocurrency blockchain protocol to win the block reward. The primary purpose of mining is to produce a history of transactions, in a way that is computationally hard to modify the records. The mining reward is the mechanism for coin distribution in the system. Miners are also paid transaction fees, creating an incentive to secure the system.
Miners use various types of hardware. CPUs (central processing unit), due to their general purpose were used by the earliest cryptocurrency miners. GPU (graphics processing unit) produced a faster hashrate, and made CPU mining obsolete. The reason for these is that CPUs are architectured Arithmetic/Logic Units (ALUs), which are good in processing instructions, while GPUs are better at intensive, specialized repetitive tasks.
Also, FPGA (field-programmable gate array), integrated circuits programmed to operate hash functions, were used for mining until ASICs (application-specific integrated circuit), microchips specifically designed to process the hash function, vastly outperformed previous technologies.
Due to the unequal probabilistic distribution of mining rewards in most cryptocurrencies, “pools” formed to share the reward evenly according to hashrate contributed.
Some proof-of-work algorithms, such as Beam’s Equihash are memory intensive, so an ASIC is difficult to optimize for electric efficiency greater than over-the-counter GPUs.