What is “Bitcoin mining” and how does mining work?

Mining is an essential activity in the Bitcoin network and is the process by which new Bitcoins are brought into circulation. It’s also a critical process for validating transactions, creating new blocks without the need for a central authority, and keeping the entire Bitcoin network safe.

Mining is what keeps the Bitcoin network running by creating new blocks on the chain and verifying Bitcoin transactions.
Transactions are verified by miners who use special hardware to solve mathematical puzzles. Miners are rewarded for their work with Bitcoin. They don’t have to contribute any money, only their computer’s computational power.
Mining is an energy-intensive activity that has been criticised for its negative impact on the environment.

How does Bitcoin mining work?

Like gold miners using picks and shovels to extract gold, a Bitcoin miner needs two things: mining hardwareand energy. Miners are computer owners who contribute their computing power and energy to the network of a Proof-of-Work-based cryptocurrency like Bitcoin.

Mining involves solving complex mathematical puzzles.Miners’ computers (called nodes) collect and bundle individual transactions from the past ten minutes (the fixed “block time” of Bitcoin) into blocks. The computers then compete to solve a complex cryptographic puzzle to be the first to validate the new block for the blockchain.

Here’s how it goes: Transactions trigger the opening of a block. The transaction information is entered then the block closes and creates a hash number that includes the encoded details from the transaction. Each new block contains information from the previous block to create a chain that cannot be manipulated or altered,which ensures that no one can spend the same unit of the currency twice. In Bitcoin’s Proof-of-Work (PoW) system, mining computers need to prove that they have expended energy in the mining process, which is how they prove that everything is correct.

Only one miner can be the first to find the correct solution to the mathematical puzzle. The winning solution is then broadcast to the entire network and the other nodes check to see if the solution is correct. If everything is in order, the new block is added to the blockchain. This process then starts again from the beginning.