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Powered rails have two states: on and off. When not receiving power (off), the powered rail acts as a brake, stopping most carts, even if on a slope. When receiving power (on), the minecart will be accelerated.
In order to accelerate the minecart, it must either already be moving or one end of the powered rail must be adjacent to a solid block, creating a "launchpad".
Before patch 1.6, Powered rails will move an occupied minecart 64 tiles on a flat surface, or 8 tiles if unoccupied. The optimal placement of powered rails is 1 every 26 rails to maintain a constant speed of 8 m/s. They are now a bit faster.
Power can be transmitted to the powered rail from any of the six adjacent tiles and works just like powering a redstone wire.