Bitcoin mining is the process by which new bitcoins are introduced into circulation and transactions are verified and added to the public ledger called the blockchain. Miners use powerful computers to solve complex mathematical puzzles, called proof-of-work. Solving these puzzles allows them to add a new block of validated transactions to the blockchain. As a reward for their work, miners receive newly created bitcoins (also called the block reward) along with transaction fees. Mining serves multiple key roles in the Bitcoin ecosystem:
- Verifying transactions to ensure legitimacy and prevent double-spending
- Securing the network against fraud by making it computationally expensive to alter transaction history
- Supporting the decentralized nature of Bitcoin by allowing anyone with suitable hardware and electricity to participate
- Introducing new bitcoins into circulation in a controlled and predictable way, with rewards halving approximately every four years
- Maintaining consensus across the network, ensuring all participants agree on the blockchain's current state
The mining process involves collecting pending transactions into a block, calculating a hash of the block's data, and repeatedly changing a nonce value to find a hash that meets the network's difficulty target. When a miner finds such a hash, the block is validated by the network and added to the blockchain. Mining requires substantial computational power and electricity due to the difficulty of the puzzles. It is an essential mechanism that enables Bitcoin's secure and decentralized operation. In summary, Bitcoin mining is both the creation of new bitcoins and the validation of network transactions through a competitive process of solving cryptographic puzzles with specialized hardware.
