{"id":6529,"date":"2019-07-17T12:09:42","date_gmt":"2019-07-17T12:09:42","guid":{"rendered":"https:\/\/paybis.com\/blog\/?post_type=glossary&p=6529"},"modified":"2026-03-16T20:28:58","modified_gmt":"2026-03-16T20:28:58","slug":"what-is-pow","status":"publish","type":"glossary","link":"https:\/\/paybis.com\/blog\/glossary\/what-is-pow\/","title":{"rendered":"PoW (Proof of Work)"},"content":{"rendered":"

Do you want to know more about Proof of Work and get a better insight into what is PoS? Read further to find out.<\/span><\/p>\n

What is PoW (Proof of Work)?<\/span><\/h2>\n

PoW, short for Proof of Work, is an algorithm used within a Blockchain network to achieve trustless and distributed consensus.<\/span>
\n<\/span><\/p>\n

Explained in further detail, a trustless and distributed consensus system means that if you want to send and\/or receive money from someone, you don\u2019t need to trust in third-party services.<\/span><\/p>\n\n

The origins of Proof of Work<\/span><\/h2>\n

The concept of PoW was originally introduced by <\/span>Cynthia Dwork and Moni Naor <\/span><\/a>in 1993 but got its official term in 1999 by <\/span>Markus Jakobsson and Ari Juels<\/span><\/a> in 1999.<\/span><\/p>\n

The concept was not used broadly until Satoshi Nakamoto discovered its powerful capabilities which were implemented in the Bitcoin network.\u00a0<\/span><\/p>\n

Given that, Proof of Work is probably the most important idea behind the <\/span>Bitcoin whitepaper<\/span><\/a> since it created a system that does not rely on trust or single parties to confirm transactions within the network.<\/span><\/p>\n

What\u2019s more, with Bitcoin and a number of other cryptocurrencies, all participating nodes (computers) have access to the ledger (blockchain). Therefore, anyone can directly verify the information written and there is no need for a third party.<\/span><\/p>\n

When it comes to Proof of Work coins, cryptocurrency miners compete against each other in hopes of confirming more transactions and getting the rewards of a block.\u00a0<\/span><\/p>\n

The more computing power (hash rate) a computer has, the more complex calculations it can solve, and thus the higher the chance of getting the rewards of a block.\u00a0<\/span><\/p>\n

How does PoW work?<\/span><\/h2>\n

Proof of Work algorithm requires users to “work” in order to get rewards. This form of work is translated into cryptographic calculations that need to be made in order to confirm a transaction on the network. Essentially, miners are competing with each other as to who will solve the correct problem first. The solution to the problem is also known as a “hash”.<\/p>\n

But why compete to solve cryptographic calculations? Well, every time that a miner manages to validate a transaction successfully (by solving the right calculations) they receive a reward in the form of cryptocurrency.<\/p>\n

The cryptocurrency they receive will depend on the network that they are solving these complex cryptographic transactions on. For example, if a miner validates a transaction made on the Bitcoin network, they will receive a reward in Bitcoin.<\/p>\n

But that is easier said than done.<\/p>\n

These cryptographic calculations require a large amount of computational power to solve effectively. And there are hundreds of thousands of miners who all compete, whether alone or in a group, to solve a transaction block.<\/p>\n

Once a particular miner solves the right problem and, thus, the transaction block, all other miners (nodes) are notified about it as well. This not only helps them proceed to the next mining block but ensures that there are no double-spending issues<\/a> in the network.<\/p>\n

The Energy Reality of Proof of Work in 2026<\/strong><\/h2>\n

Bitcoin mining consumed approximately 173 terawatt-hours of electricity in 2025, representing 0.5% of global electricity demand. To put this in perspective, Bitcoin’s annual energy consumption now rivals entire nations like Poland or Argentina. The energy intensity per coin mined increased to 209 megawatt-hours per Bitcoin, up from 202 MWh the previous year, as mining difficulty continues to rise with network growth.<\/p>\n

The raw energy cost of mining one Bitcoin now exceeds $100,000 in many U.S. regions at current industrial electricity rates, even before accounting for capital expenditure, staffing, or operational overhead. This economic pressure forces operators to either dramatically improve efficiency or shut down entirely. Only the most cost-effective miners remain competitive, typically those with access to:<\/p>\n