Bitcoin mining is the process of verifying and adding transaction records to the public ledger (blockchain). The ledger is maintained by a decentralized network of computers that are constantly verifying and timestamping transactions.
Bitcoin nodes use the block chain to differentiate legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.
Mining is how new Bitcoin is brought into circulation. Miners are rewarded with Bitcoin for verifying and committing transactions to the blockchain.
Mining is also the mechanism used to introduce Bitcoins into the system: Miners are paid any transaction fees as well as a “subsidy” of newly created coins. This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system through mining.
The more computing power a miner controls, the higher their hashrate and the greater their chances of solving a block and earning rewards. Hashrate, or hash power, refers to the computational speed at which a miner can operate.
The higher their hashrate, the more guesses they can make per second in an attempt to solve a block and earn rewards. .
To earn rewards, miners need not only an operational miner but also an up-to-date copy of the entire blockchain, which contains all Bitcoin transactions since the currency’s inception in 2009. The blockchain is stored on every single node in the network, so miners always have access to an up-to-date version of the ledger.
Mining pools are groUPS of miners that work together to increase their chances of solving a block and earning rewards. By working together in a pool and sharing resources, miners can get a steadier stream of income than they would mining alone.
When a block is successfully mined, new Bitcoin is created and awarded to the miner in addition to any transaction fees that were included in the block. This process is known as creating a new block, or finding a block reward. The current block reward is 12.
5 BTC, which will be halved every 210,000 blocks (approximately every four years). This halving process will continue until there are 21 million BTC in circulation, at which point no new Bitcoin will be created.
How Is Bitcoin Mining Calculated?
Bitcoin mining is calculated by sharing processing power between different miners in order to find blocks faster than any one individual could on their own. By working together in this way, everyone involved earns a share of the newly created bitcoins proportional to their contributed processing power.