Bitcoin-type proof of work

In 2009, the Bitcoin network went online. Bitcoin is a proof-of-work digital currency that, like Finney's RPoW, is also based on the Hashcash PoW. But in Bitcoin, double-spend protection is provided by a decentralized P2P protocol for tracking transfers of coins, rather than the hardware trusted computing function used by RPoW. Bitcoin has better trustworthiness because it is protected by computation. Bitcoins are "mined" using the Hashcash proof-of-work function by individual miners and verified by the decentralized nodes in the P2P Bitcoin network.

The difficulty is periodically adjusted to keep the block time around a target time

Energy consumption

Since the creation of Bitcoin, proof-of-work has been the predominant design of peer-to-peer cryptocurrency. Studies have estimated the total energy consumption of cryptocurrency mining. The PoW mechanism requires a vast amount of computing resources, which consume a significant amount of electricity. 2018 estimates from the University of Cambridge equate Bitcoin's energy consumption to that of Switzerland.

History modification

Each block that is added to the blockchain, starting with the block containing a given transaction, is called a confirmation of that transaction. Ideally, merchants and services that receive payment in the cryptocurrency should wait for at least one confirmation to be distributed over the network, before assuming that the payment was done. The more confirmations that the merchant waits for, the more difficult it is for an attacker to successfully reverse the transaction in a blockchain—unless the attacker controls more than half the total network power, in which case it is called a 51% attack.

ASICs and mining pools

Within the Bitcoin community there are groups working together in mining pools. Some miners use application-specific integrated circuits (ASICs) for PoW. This trend toward mining pools and specialized ASICs has made mining some cryptocurrencies economically infeasible for most players without access to the latest ASICs, nearby sources of inexpensive energy, or other special advantages.

Some PoWs claim to be ASIC-resistant, i.e. to limit the efficiency gain that an ASIC can have over commodity hardware, like a GPU, to be well under an order of magnitude. ASIC resistance has the advantage of keeping mining economically feasible on commodity hardware, but also contributes to the corresponding risk that an attacker can briefly rent access to a large amount of unspecialized commodity processing power to launch a 51% attack against a cryptocurrency.

Majority Attack (51% attack)

By design, Bitcoin's Proof of Work consensus algorithm is vulnerable to Majority Attacks (51% attacks). Any miner with over 51% of mining power is able to control the canonical chain until their hash power falls below 50%. This allows them to reorg the blockchain, double-spend, censor transactions, and completely control block production.

There was a notable double-spend on Bitcoin in March 2013 when the chain split due to a bug in the Bitcoin 0.8.0 client. While on the 0.8.0 chain, a merchant (OKPAY) confirmed a $10k deposit from a customer. Bitcoin miners then 51% attacked the network, reverting 24 blocks and reversing the transaction leading to the customer's deposit. The customer then double-spent the bitcoin on the canonical pre-0.8.0 chain as an experiment.

A 2025 paper by Duke University Finance Professor Campbell Harvey estimates that a week-long 51% attack on Bitcoin could be executed with only $6 Billion at Oct 2025 prices. The total cost of attack would be less than 1% of Bitcoin's total value. An attacker could profit from shorting Bitcoin or for non-economic reasons.