What is Bitcoin Mining?

What is Bitcoin Mining?
Bitcoin Mining is a peer-to-peer IT process used to secure and verify bitcoin-payment transactions from one user to another over a decentralized network. Exploration involves adding bitcoin transaction data to the global public record of past Bitcoin transactions. Each transaction group is called a block. The blocks are secured by Bitcoin miners and build on each other forming a chain. This ledger of past transactions is called the blockchain. The blockchain is used to confirm that transactions to the rest of the network have taken place. Bitcoin nodes use the blockchain to distinguish legitimate Bitcoin transactions from attempts to re-spend parts that have already been spent elsewhere.

What is the proof of work?
Bitcoin Mining is intentionally designed to be resource-intensive and difficult, so that the number of blocks found each day by the miners remains stable over time, producing a finite monetary supply controlled. Individual blocks must contain proof of work to be considered valid. This proof of work (PoW) is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses a PoW function to protect against double spending, which also makes the Bitcoin registry immutable.

How does the mining industry create new bitcoins?
The main purpose of the exploration is to allow Bitcoin nodes to reach a secure and tamper-proof consensus. Mining is also the mechanism used to introduce bitcoins into the system. Minors are paid transaction fees and a grant of newly created coins, called block rewards. This serves both to distribute new parts in a decentralized way and to motivate people to ensure the safety of the system through mining.

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bitcoin mining

Mining is the process by which Bitcoin transactions are secured. To this end the miners perform with their computer hardware mathematical calculations for the Bitcoin network. As a reward for their services, they collect newly created bitcoins as well as transaction fees that they confirm. Currently this reward is 12.5 bitcoins per block. It is halved every four years or so.

Minors (or miners' cooperatives) compete and their incomes are proportional to the computing power deployed.

"To describe the mining, we could use the example of a huge sudoku contest where participants start a new grid as soon as someone finds a solution, and whose difficulty is adjusted so that on average a grid is resolved every ten minutes. Imagine a giant grid of sudoku, with many thousands of rows and columns. It would be easy enough to check that a completed grid is full. But [...] it will take a lot of work to finish! The difficulty of grids can be adjusted by changing their sizes, [...] but they can still be easily checked even if they are very large. The puzzles to solve in the bitcoin network are based on cryptographic hashes and have the same characteristics as these sudoku grids: they are very difficult to solve but it is very easy to verify that a solution is good, and their difficulty can be adjusted. - Andreas M. Antonopoulos.

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