TechExplainer

Proof of work vs proof of stake: how do blockchains agree on the next block?

Every public blockchain needs a way for strangers to agree on one history. Proof of work spends electricity to do it; proof of stake puts money up as collateral. Here is how each works and what the trade-offs are.

By the Bitfolio Explainer Desk · Checked against primary sources · 7 min read

Rows of cryptocurrency mining devices connected by tangled cables — Photo: “Icarus Bitcoin Mining rig” by Xiangfu, CC BY-SA 4.0, via commons.wikimedia.org · Edited: duotone, cropped.

The short answer

Both decide who adds the next block. Proof of work makes miners race to solve a costly computing puzzle. Proof of stake has validators lock up coins as collateral that can be cut if they cheat. Bitcoin uses proof of work; Ethereum switched to proof of stake in 2022.

Key takeaways

A consensus mechanism lets thousands of computers that do not trust each other agree on a single order of transactions.
Proof of work makes block producers prove they spent computing effort; cheating means out-computing everyone else.
Proof of stake makes block producers lock up coins; cheating can get that stake destroyed through penalties called slashing.
Ethereum moved from proof of work to proof of stake on 15 September 2022, cutting its energy use by about 99.95% according to ethereum.org.
Neither design is attack-proof: both can in theory be overpowered by someone who controls a majority of the key resource.

What problem do proof of work and proof of stake solve?

Digital money has an obvious weakness: a file can be copied. Without a referee, what stops someone from sending the same coin to two people? The Bitcoin paper calls this the double-spending problem, and its answer is a public, time-ordered record that everyone can check¹. Our explainer on how a blockchain works covers that record. This page covers the harder question: who gets to write the next page?

The rule that answers it is called a consensus mechanism. NIST lists several, from proof of work and proof of stake to round robin and proof of authority². Public cryptocurrencies mostly use the first two, because both let anyone take part without asking permission while making cheating expensive.

Figure · Two ways to make cheating expensive

Proof of work

Miners spend electricity on puzzles
Winner of the race adds the block
Attack needs most of the computing power

Proof of stake

Validators lock up coins as collateral
Protocol picks who proposes the block
Attack needs most of the staked coins

How does proof of work actually work?

In proof of work, computers called miners bundle waiting transactions into a candidate block and then search for a number, the nonce, that makes the block's hash meet a target. The Bitcoin paper describes this as finding a value whose SHA-256 hash begins with a required number of zero bits, by changing the nonce until one works¹. ethereum.org calls this an intense race of trial and error³.

One round of mining, simplified

1
Build a block
The miner collects valid, unspent transactions into a candidate block¹.
2
Guess
It changes the nonce and hashes the block again and again until the result meets the difficulty target¹.
3
Broadcast
A miner that finds a valid result broadcasts the block, and other nodes accept it only if all its transactions are valid and unspent¹.
4
Get paid
The block's first transaction creates new coins for its creator, and transaction fees can add to the reward¹.

The network tunes the puzzle so blocks keep a steady pace. Bitcoin adjusts the difficulty every 2,016 blocks, aiming for about one block every ten minutes²; at that pace, 2,016 blocks take about 14 days. When two miners find blocks at once, nodes keep building on the longest chain¹, and the shorter branch is abandoned.

Finality in proof of work is a matter of probability. Each new block on top of yours makes it harder to undo, and ethereum.org describes PoW finality in exactly those terms: the more blocks mined on top, the higher the confidence a transaction will not be reversed³.

How does proof of stake work?

Proof of stake replaces the electricity race with collateral. On Ethereum, anyone who wants to help run the chain as a validator deposits 32 ETH into a deposit contract and runs three pieces of software: an execution client, a consensus client and a validator client⁴.

Time is cut into slots of 12 seconds, grouped into epochs of 32 slots⁴, so one epoch lasts 6.4 minutes. In every slot, one validator is chosen at random to propose a block, and a randomly chosen committee of validators votes on it; each vote is called an attestation⁴.

Figure · One Ethereum slot, simplified

01Random pickone proposer per slot
02Block proposedwithin a 12-second slot
03Committee votesattestations
04Finalitytwo-thirds of stake agrees

Source: [4]

Blocks become final, meaning they cannot change without enormous cost, once a pair of checkpoints gathers votes from validators holding at least two-thirds of all staked ETH⁴. Validators that break the rules can be slashed, losing part of their stake; the penalty grows when many validators are slashed around the same time⁴.

What are the main differences between proof of work and proof of stake?

Proof of work and proof of stake side by side

	Proof of work	Proof of stake
Scarce resource	Computing power and electricity	Coins locked as collateral
Who produces blocks	Miners racing to solve a puzzle¹	Validators picked at random⁴
Entry cost	Specialised hardware and energy³	A stake (32 ETH for an Ethereum validator)⁴
Finality	Probabilistic: more blocks, more certainty³	Explicit checkpoints backed by two-thirds of stake⁴
Penalty for cheating	Wasted electricity on rejected blocks	Slashing of the deposit⁴
Majority attack needs	Over half the network's mining power³	Over half of all staked coins⁴

Ethereum's documentation lists proof of work's strengths as neutrality (you need no coins to start), a long track record and relative simplicity, and its weaknesses as heavy energy use, costly specialist equipment and a tendency for mining to concentrate in large pools³. For proof of stake it highlights better energy efficiency, lower hardware requirements and reduced centralisation risk⁴.

NIST adds a caution about proof of stake: participants with more coins can stake more and so earn more, though buying a controlling majority is usually prohibitively expensive².

What changed when Ethereum switched to proof of stake?

Ethereum launched in 2015⁶ using proof of work³ and later ran a separate proof-of-stake chain, the Beacon Chain, alongside it from 1 December 2020⁵. On 15 September 2022, in an upgrade called The Merge, the original chain was joined to the Beacon Chain and mining stopped; validators took over block production⁵.

Figure · Ethereum's road to proof of stake

Jul 2015Ethereum launches (Frontier)
Dec 2020Beacon Chain starts in parallel
Sep 2022The Merge: mining ends
Apr 2023Staking withdrawals enabled
May 2025Pectra raises validator balance cap

The energy effect was large. ethereum.org estimates that miners were using about 70 TWh a year shortly before the switch³, and that The Merge cut Ethereum's energy consumption by about 99.95%⁵.

Note

Two common myths about The Merge

The Merge did not lower transaction fees; ethereum.org says it was never intended to and did not significantly change network capacity⁵. It also did not let stakers withdraw their ETH. Withdrawals came later, with the Shanghai/Capella upgrade on 12 April 2023⁶.

The 32 ETH deposit is the entry ticket, not a cap. The Pectra upgrade on 7 May 2025 raised the maximum effective balance a single validator can have to 2,048 ETH⁶.

What mistakes do beginners make when comparing the two?

Common beginner mistakes

Treating staking rewards as safe income
Validators that break the rules can be slashed⁴, and the coin you stake can still fall in price. Rewards do not protect you from either.
Assuming proof of stake cannot be attacked
An attacker with a majority of the staked coins could still cause harm⁴; the defence is cost, not impossibility.
Believing mining "creates" value
Mining secures the ledger and issues new coins under fixed rules. It says nothing about what those coins are worth.
Mixing up the network and the platform
Staking through an exchange adds the platform's own risks on top of the protocol's. Check who holds your coins; our guide to crypto custody explains why it matters.

Risk warning

Staking puts your coins at risk

Locking coins to earn staking rewards exposes you to slashing penalties, price swings and, if you use a third-party service, the risk that the service fails. Never stake money you cannot afford to lose, and read our risk disclosure first.

Frequently asked questions

Does Bitcoin use proof of work or proof of stake?

Bitcoin uses proof of work, as set out in its original paper¹, with mining difficulty adjusted every 2,016 blocks².

Is proof of stake more secure than proof of work?

They make attacks expensive in different ways. On Ethereum, reverting a finalised block would cost an attacker at least one-third of all staked ETH⁴, while a proof-of-work attacker needs most of the mining power³. Which is "more secure" depends on the threat being considered.

Can I still mine ether?

No. Since The Merge in September 2022, mining is no longer how Ethereum blocks are produced; validators do that job⁵.

What is a 51% attack?

It is an attempt to control which blocks are accepted by holding a majority of the key resource: computing power in proof of work or staked funds in proof of stake. NIST lists it as a risk for both models².

Do I need 32 ETH to earn staking rewards?

Running your own Ethereum validator requires a 32 ETH deposit⁴. Pooled and exchange services accept smaller amounts but add their own risks, so read their terms carefully.

The bottom line

Proof of work and proof of stake answer the same question, who adds the next block, with different costs: electricity and hardware on one side, locked-up coins on the other. Ethereum's 2022 switch showed that a large network can change models and cut energy use sharply. Neither model is attack-proof, and staking carries real financial risk.

Sources

Bitcoin: A Peer-to-Peer Electronic Cash System — Satoshi Nakamoto (whitepaper hosted at bitcoin.org), 2008 Primary source
NIST IR 8202: Blockchain Technology Overview — National Institute of Standards and Technology, U.S. Department of Commerce, 2018 Primary source
Proof-of-work (PoW) — ethereum.org developer documentation Primary source
Proof-of-stake (PoS) — ethereum.org developer documentation Primary source
The Merge — ethereum.org Primary source
The history of Ethereum (network upgrades) — ethereum.org Primary source

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