Proof of work is a system that regulates the formation of blocks on a blockchain by requiring miners to perform computationally demanding tasks before adding data. This process creates an asymmetry where solving the puzzle is hard but verifying the solution is simple, ensuring network security through computational effort.
Moni Naor and Cynthia Dwork published the foundational paper Pricing via Processing or Combatting Junk Mail in 1993 proposing early proof of work concepts. Adam Back expanded on this idea in 1997 with Hashcash, which used partial hash inversions of the SHA-1 algorithm to generate stamps requiring specific computational effort.
Satoshi Nakamoto adapted Hashcash's principles in 2008 to create Bitcoin using the SHA-256 algorithm for mining new currency. Miners compete to append blocks and earn rewards in cryptocurrency while allocating computational capacity to ensure consistent block intervals of approximately 10 minutes.
Any miner controlling over 51% of mining power can manipulate Bitcoin's canonical chain until their hash power falls below 50%. This vulnerability allows reorganization of blocks, double-spending transactions, censorship, and complete control over block production as seen in historical incidents like the March 2013 bug.
Studies from the University of Cambridge equated Bitcoin's energy consumption to Switzerland's total usage by 2018 due to vast amounts of computing resources required. New York enacted a two-year moratorium on cryptocurrency mining in November 2022 that does not completely use renewable energy sources reflecting global concerns over resource requirements.