What is Bitcoin Mining and How Does It Work? – Decrypt

What is Bitcoin Mining and How Does It Work? – Decrypt

In brief

  • Bitcoin mining is the process of adding and verifying blocks of transactions to Bitcoin’s public blockchain.
  • Bitcoin uses the “proof of work” consensus mechanism, which demands commitment from miners in the form of expensive mining hardware and electricity.
  • Miners compete to solve a complex cryptographic puzzle, and are rewarded with newly-minted Bitcoin.

Bitcoin mining is the process by which blocks of transactions are added to the public blockchain and verified. It’s also the process by which new Bitcoin is created—a mechanism that both secures the integrity of the blockchain and incentivizes participation in the network.

Miners compete to add new blocks to the blockchain. Mining Bitcoin demands a substantial commitment on the part of miners; it’s a costly, time-consuming task, and one that’s necessary for the cryptocurrency to work and for people to have faith in its legitimacy.

Over a decade since Bitcoin was created by Satoshi Nakamoto, most people have heard of mining. But what does it really mean—and how do you go about mining Bitcoin?

What is Bitcoin mining?

Mining Bitcoin isn’t like digging for gold or coal deep underground. It refers to verifying the transactions made using Bitcoin. Miners are those individuals or companies that sustain and audit the blockchain network that supports the cryptocurrency.

They do so by completing “blocks” of verified transactions, which are added to the blockchain; when a miner completes a block,