Before you purchase your pickaxe and mining helmet, you might want to learn a thing or two about the NFT industry and what, precisely, “mining” has to do with the entire process. Mining is a term often used in the crypto and NFT industries to denote a method of operations.

To fully understand the process, it is first crucial to dive into the NFT itself, how it works, and what it means. Once you see the technology “behind the curtain,” it can be easier to digest the intricate details of its process.

Let’s take a closer look at the world of NFTs and the complicated computations that make them possible.

What Is an NFT?

It is one thing to break down one of the many abbreviations in the online world, but it is another to understand its meaning. The NFT world involves many moving parts, different technologies, and securities that keep the operations humming.

To fully understand what an NFT is, how it has a market value, and the way in which they are created, owned and exchanged involves discovering more about the technology that is involved at every level.

Breaking down a major concept like NFT mining requires an understanding of its variables, not to mention the concepts behind the novelty. Let’s dive into those moving parts to better understand the big picture of the NFT mining process.

The Non-Fungible Token

It is always wise to start at the very beginning. To understand an NFT, it is ideal to know what that phrase means. The technical translation of the abbreviation is non-fungible token. This information of course may not clear up anything at all if you are unfamiliar with the space.


The first part of the phrase simply means that something has no precise equal. It cannot be traded for something exactly the same. It is unique.

If you have a quarter in your hand, you can swap it for another quarter. You can even swap it for two dimes and a nickel. Either way, you have a quarter of one U.S. Dollar (or 25 cents) in your hand. Its value did not change, even if the form did.

When it comes to the NFT, there is no single thing that is exactly the same as another. An NFT is completely unique. Much like the cliché “no two snowflakes are alike,” the NFT is a special and individualized item.

The NFT can only have one owner at a time. As it is unique, it cannot be owned by different people at the same time. It can be transferred, bought, sold, traded, or saved, but it cannot waiver between owners.

The owner of an NFT is verifiable, as is the NFTs authenticity, rarity, and location. Thanks to its unique technology, which we will get more into soon, this unique concept of the NFT exists thanks to the tech behind it.

A Token

The second part of the phrase, token, is a bit easier for most to understand. A token is simply an item standing in for something else, or representing another thing. For example, when you were younger, there’s a chance you played video games in an arcade.

Most arcades of the early 80s did not accept quarters for gameplay. Instead, players would insert cash into a machine which would then convert the funds into tokens. These arcade tokens were the currency of that space and that space only. They were a token that stood in for the value of money but was not themselves money.

The token was not useful outside of the arcade. You could not, for example, walk around the mall and purchase a drink with a golden arcade token. It was only good for games inside the arcade.

In a similar way, the cryptocurrencies of today’s online marketplace have unique values and use. Much like having the right token for the right arcade (or even the right fiat money in the right country when traveling), you must have the proper crypto in hand to do business on the chosen platforms.

Each has compatible funds that work with its operations. Some accept a few forms, some accept only one. But, no matter the space, there is likely unique crypto to go along with it. But how do things like crypto, and especially NFTs, exist at all?

To understand what an NFT truly means understand its technology. That tech has its start with the concept of decentralization.

Decentralized Operations

In order for crypto or NFTs to exist, there was first a desire. It is often said that necessity is the source of innovation, and that is true in the online arena just as much as it is in the real, tactile world. As big business (and in some cases, governmental powers) continued to grow, a need and desire to move away from sources of power also grew.

Online users enjoy freedom. They don’t often want to be told what to do. The fewer rules and regulations, the more free users can work with one another, have open lines of communication, and not fear the power of a central authority.

From these values stemmed the concepts behind Web3, cryptocurrency, and yes, the NFT.

No Central Authority

In an effort to bring the “power” back to “the people,” many online users favored a concept that would move away from big business. Powerhouses like Google, Amazon, and the like seemed to own so much of the world wide web. Social media giants like Facebook, Twitter, and Instagram did not help matters as more corporations took the helm, controlling everything from users’ privacy to the language that could and could not be used.

In order to combat that phenomenon, the idea of decentralization began to take form, offering an online space that was not a “possession” or under the authority of any one individual power.

Beyond the Values

While many agreed with a sentiment to redistribute power, another need was created by a need for security. Centralized servers mean a single location of information. Beyond who has authority over that data, the concept of massive amounts of data being physically stored in a single space was a security nightmare.

Any hacker that could gain access to the centralized servers of even major corporate giants in the online world would also gain access to personal information. Everything from your social security number, to identity, to passwords and bank accounts, the private information of any online user is put at risk when a single “computer” or server contains massive amounts of information.

Blockchain Technology

In an effort to make a successful move away from centralization, the technology known as the Blockchain emerged. This is the tech that makes things like crypto or NFTs possible. Its uses create the ability to authenticate ownership, protect digital assets, and even secure data in the process.

To understand the tech, we will again break down its meaning. The existence of NFTs or the process of mining NFTs would not be possible without it.

What Is a Blockchain?

To understand the complete picture of the NFT, it is necessary to break down the tech that makes it possible: the blockchain. The blockchain is often described as a distributed ledger of sorts. It supports the decentralization concepts and values, while also making the process of transactions more secure and automated, without the interference of a central authority or third party.

The blockchain is made up of buckets of data (known as blocks). These clusters of information are strung together (a chain, if you will), chronologically, to store information in an ordered and sensible fashion.

A Peer-to-Peer Network

In order for decentralization to be successful, information must be, in some way, distributed. The blockchain operates by distributing data across a network of peers. Each peer (or online user of the blockchain) has a copy of the data. It contains all of the information.

The blockchain, as a distributed ledger, keeps a log of all the comings and goings of a particular item. A type of cryptocurrency, for example, will have its own blockchain. In that blockchain, all of the transaction processes, from the initial drop to today’s holders, are shown in the chain.

Likewise, for the NFT space, platforms contain a blockchain that follows each NFT. From its creation (known as the mining process) to today’s owner, and each exchange along the way is documented in the “ledger.”


The blockchain, in its distribution and multiple copies, also allows for transparency. Any user, at any time, can see a full description of all transactions of a particular NFT (or cryptocurrency).

Not only does this tech allow for a system of checks and balances, but there is no question about the authenticity or verification of a particular NFT’s owner or its existence. With even a minor level of tech-savvy ability, any user can become a blockchain user, and provide fair, visible processes thanks to the transparency of the blockchain.


The blockchain also creates a sense of security. Not only are databases of information distributed across the network, they are also made more secure by the immutable nature of the blocks.

Blocks, once locked into the chain, cannot be altered for any reason by anyone. This keeps the authenticity and verification process secure, as no alterations can wreak havoc on the data.

The NFT Market

With all of these technologies working together, the process of the NFT marketplace is made possible. NFTs, or digital assets, can represent nearly anything.

Some transaction websites allow tokens to represent a piece of real estate or a vehicle. Others use tokens to create a level playing field in order to trade, unlike objects.

For example, if my car is to be traded for your NFT, how would we know what value is fair? If we know my car is worth 20 tokens, and your NFT is worth 20 tokens, we can fairly exchange the two. In short, the use of these tokens and technologies allows you to truly compare apples and oranges (assuming you know how many tokens each is worth).

The Power Behind NFTs

Understanding the technology is one thing, however, understanding how it is powered is another. A chief complaint of the decentralized operational web is not that it eliminates centralized power, but that it takes up massive amounts of real-world energy to do so.

Besides the countless computers (or smart devices) connected to the world wide web (and all of the electricity those take to operate), these securities are made possible by a series of complicated computations that “lock” the data into the blocks.

The process of making even one token can cost quite a bit in terms of energy usage.

Gas Fees

To solve the complicated equations, workers are known as “miners” are constantly competing to be offered the chance to win the ability to close the block, thusly earning funds for doing so. Miners, however, are earning funds partially to cover the costs of doing business.

These fees are known as gas fees or gas costs. It is the financial cost of doing business in the blockchain space. The ironic name has some meaning because, just as it takes gas to run your vehicle, gas is the “fuel” that keeps the blockchain humming.

Not Very ‘Green’

Because of its massive uses of energy (some blockchains require the energy usage of a small country to simply run), the minting process (or the creation of a new NFT or crypto) is a costly one and not just in terms of finance.

Minting cost also includes the impact that the process has on the environment. The more tokens that are minted, the more energy that is used. No matter what the individual miner is charging, there is a cost to each NFT mined. It is typically up to the miner, or in some cases the overall platforms, how much or if a gas fee is charged. They will vary depending on the website you are using for mining. Consider your gas fees, along with the cost of energy used, when you weigh the price of your next NFT.

The Algorithms Used

The process of mining varies depending on the system you are operating on. For example, the Ethereum blockchain offers one of the first-ever minable NFTs. On the Ethereum network, one mining transaction style is made on the POW NFT project. This page offers its users the ability to mine for an NFT.

No matter how the blockchain operates, there is an algorithm at its core. This algorithm determines the way in which they work (or mining process) must be done. Once this method of operations is determined, no one can control or change that process.

Members of a blockchain, or its peers in control, must hash out the type of process they want to use when developing the initial network. Typically, a majority of users must agree on the exchange concept. Once it has reached acceptance, there is no changing that programming.

So, what are the types of programming used? Each network will vary, but there are two algorithms most frequently found in the NFT space.

Proof of Work

The first algorithm often used in NFTs is the “POW” method or Proof of Work. The proof of work example, which is used most commonly in the mining of Bitcoin, is the program that requires miners to “prove” that they’ve done the legwork (or is it finger work at the keyboard?) in order to participate.

Proof of work in the case of the blockchain is a program that allows the formation of a new block (containing the data of transactions) to a cryptocurrency’s or NFT’s blockchain. The work, in this case, is called generating “a hash” (a long string of characters) that matches the target hash for the current block. A crypto miner who is able to work out the complicated series of characters will win, and this wins said miner the right to add that block to the blockchain and receive rewards.

Proof of Stake

Another commonly used option for the blockchain’s programming includes the Proof of Stake or POS. In this system, users are to stake or post up funds, much like gambling in a casino. A winner (chosen to mine the block of data) is chosen at random.

Think of it like a large spinning wheel game. Users that hope to win a chance to mine a new block of data compete by placing their “bets” (or staking crypto). The wheel spins (an automated smart contract randomly selects) and a winner is chosen.

Once determined, that winner can form the new block and thusly receive its rewards (fees paid to them). In some cases, POS blockchains may also allow what is known as a Stake Pool, or when a group of people “pool” or join their resources to post the stake.

Pools make it possible for users that don’t want to wait to acquire massive amounts of crypto to join a group, splitting the opportunity, but also increasing their chances of winning. The method can make a POS space more accessible, as people can work together to “win” a chance.

Alternative Algorithms

If putting up money in exchange for a chance to mine doesn’t sound appealing, or if the scarcity of natural resources concerns you thusly making the POW model worrisome, there are alternatives. Far less frequently used, methods such as:

  • Proof of Capacity
  • Proof of Elapsed Time
  • Proof of Burn

are also used in the blockchain space. Each varies, and new programming options are continually changing and upgrading in order to allow mines to exist without the costly upfront venture or the cost to Mother Nature.

Staying tuned in to the changes in the industry can help to keep you informed of new developments in this ever-changing landscape.

NFT Mining

Today’s ability to mine NFTs is typically made possible through the Proof of Work (POW) form of algorithms. NFT mining was first introduced with POW NFT on the Ethereum blockchain. POW NFTs are obtained by mining. By joining the Ethereum address (i.e. simply connecting your digital wallet to an Ethereum wallet), users can begin a quest to own their very first NFT by simply mining.

The only way to own an NFT on the POW NFT Ethereum address is to mine. Mining makes these NFTs possible, and as a “reward,” the miner is granted the NFT itself in this unique market.

The NFT Mining Process

POW NFTs are acquired by mining, just like the creation of Bitcoin or Ether. That same process is used to create POW NFTs. POW NFTs are called “Atoms.” Each and every Atom is unique. It is rendered based on the token’s unique hash. As previously noted, the hash is the “code” or series of characters that “locks” a block into place.

Once a miner computes the hash to a unique NFT, that NFT will be released to him or her as a “reward.” Each Atom contains a generative musical track on POW NFT. The more often an Atom is “created,” the harder it will become for future Atoms to be created. In other words, as time passes, mining becomes more difficult.

POW NFT relies on this process of increasing difficulty to allow for higher demand and greater scarcity of available NFTs. The value is driven up by this fact, and the market for an Atom can be quite high.

By using a basic web browser and going to, a user can operate the coding built into the website already. This programming allows a miner to start mining immediately, simply by connecting a Metamask digital wallet.

To connect your wallet, simply scroll to the page’s bottom line where you will see a green “connect” word highlighted (clickable). Click here, enter your Metamask private keys, and you are on your way.

Mining NFTs, Lowering Congestion

One major reason that gas fees are on the rise (and not just at the pump for your car) is the increased popularity of the NFT. With programs such as POW NFT, miners can do their work off of the blockchain.

Using their own computer, a miner can do the “work” they are required to “prove” on their own. Applying said work to gain access to mine (or in the case of POW NFT, to claim their NFT) simply requires them to jump back onto the blockchain when the work is complete.

This process helps to reduce the congestion often seen in the blockchain space. With plenty of users on at the same time, blockchains become clogged with traffic, and many miss the chance to participate. The price is driven up, not by the intended scarcity of an NFT, but by the inability to access the technology.

Having a space that allows users to work to own an NFT, instead of simply making them available for purchase, makes the overall “live” traffic on the blockchain slower, and thusly can help lower the price.

POW NFT Isn’t Problem Free

Just because you have solved a hash and submitted your work doesn’t mean that you will “win” the given NFT. And sadly, this isn’t the only dilemma in the new mine for the NFT process.

A Miner Beat by Bots

Unfortunately, like most programs, profits can be low thanks to the use of sneaky “bots.” Bots will scroll through massive amounts of data in order to find lucrative trades.

These bots rather destroy the market as they are able to scan far more transactions than the average user. These bots require little revenue and are able to find sensible transactions to boost profit quickly.

Known as a “front-runner,” these bots “run ahead” and find a smart transaction. They see quickly they can gain a profit, so outbid incoming users. A typical miner will quickly be shut out of the transaction, thusly losing the Atom, all because of a bot.

Artificial Scarcity

Do you know what would happen to the world’s money if we just kept printing more? While it would be nice to just make a new token each time we wanted a digital asset, doing so would drive down the value of the currency.

If the U.S. Government, for example, print more dollars to help the deficit, the opposite would actually occur. Each dollar (or in this case Atom) will lose value with each new one created. When the NFT space opened up the concept of mining for NFTs they are also building into the equation what is known as an “artificial scarcity.”

Websites such as POW NFT say that “the more Atoms that exist, the more difficult they are to mine. Combined with a generational demand curve for minting costs, this creates market-driven scarcity.”

They hope that by making the mining process more difficult, there will be even fewer Atom creators down the road.

The Wild World of The NFT

While crypto such as Bitcoin brought about the ability to mine, the application to the NFT world is still in its infancy stages. This market for NFTs is known for its wild volatility and constant change.

Whether you were mining a new Atom or scanning for the price of today’s latest NFT, there is always going to be a new, better, different way to do business. POW NFT may be one of the first to use the concept, but will not likely be the last.

Always Changing

The only thing one can be certain about when it comes to the future of NFTs is there will be change. Things are always being updated, and not just the price tags. The only way to stay up to date on the latest and greatest is to find a way to stay informed.

Stay Informed

In an industry known for its constant change, it is best to stay informed of updates. The ability to mine an NFT didn’t exist not so long ago. The cost of gas fees has increased incredibly from what they were just a year ago.

It isn’t always easy to find ways to stay informed of such major and drastic changes. Thankfully, you have found a tool for the long haul.

A Reliable Resource

Thankfully, FLOLiO brings you informative and well-researched articles to keep you in the know. Don’t risk a single token. Keep yourself in the loop with updated, reliable resources like FLOLiO to keep your digital assets safe!

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