Bitcoin Mining

In simple terms

Bitcoin mining is a competition where specialized computers guess numbers as fast as they can, and the winner gets to add the next page of transactions to Bitcoin's ledger and is paid in new bitcoin. Having more computing power is like buying more lottery tickets — it improves your odds, but each attempt is still a guess.

Definition

Bitcoin mining is the process in which specialized computers repeatedly hash candidate blocks until one meets the network's difficulty target, earning the winner the right to add that block of transactions to the blockchain along with the block reward and its transaction fees.

In depth

Miners assemble pending transactions into a candidate block and repeatedly alter a nonce, running the block header through the SHA-256 hash function twice until the output falls below a target value; the result cannot be computed backwards, so the only method is brute-force guessing. The network retargets that difficulty every 2,016 blocks, roughly every two weeks, to hold the average block interval near ten minutes regardless of how much hardware has joined or left. Miner revenue has two parts: the block subsidy, which halves every 210,000 blocks (about four years, standing at 3.125 BTC per block after the 2024 halving), and the transaction fees paid by users, whose share of revenue is designed to grow as the subsidy trends toward zero. Because almost all mining is done by purpose-built ASICs organized into pools that split rewards in proportion to submitted shares, the industry's economics reduce to hardware efficiency against electricity price, and the aggregate hash rate serves as the practical measure of how costly it would be to attack the chain.

Related terms

• Mining
• Proof of Work (PoW)
• Hash Rate
• Hash
• Emission Schedule
• Node