What is Bitcoin Mining?

 

 

 

 

 

 

 

 

 

 

 

Bitcoin mining is how the network stays secure and transactions get confirmed. Miners compete to solve a cryptographic puzzle by making trillions of guesses per second using specialized computers. The first miner to find the correct solution wins three things: 

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• 1. The ability to add the next block of transactions to the blockchain

• 2. The most important part, the current block reward (3.125 Bitcoin as of April 2024 halving)

• 3. Every transaction fee from that block of transactions

 

This winner is chosen purely by who finds the solution first. The whole network then verifies their work before accepting the new block.

 

How mining works:

​Users send Bitcoin where they then sit in the “memepool” (the waiting area). Miners compete to solve a complex puzzle. They make guesses on a random number (the “nonce”) to validate the block.

 

The first miner to solve this wins. They add to the blockchain and get 3.125 Bitcoin as a reward. The reward amount changes every halving. Finally, other nodes check the network and verify the block

 

 

What do miners need?​

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Mining rewards and economics:

​The current block reward for miners is 3.125 Bitcoins.This value halves every ~4 years. Miners also earn transaction fees from users when they make transactions. The fees rise when the network is busier. 

 

It typically takes 6-18 months for Bitcoin miners to break even and pay for their hardware. The last Bitcoin is expected to be mined in 2140. More info under the “Halving and Difficulty” page.

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Why mining matters:

​No miners = No Bitcoin. Miners keep the framework of Bitcoin secure. Miners also allow for new Bitcoin to enter circulation. Think of it as digital gold mining. Bitcoin mining is decentralized. No one mining group or individual controls the majority of Bitcoin mining. 

 

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Common questions:

​Is Bitcoin mining bad for the environment?

•  Bitcoin uses less than 0.2% of global energy. This is less than the total consumption from Christmas lights and gold mining. Many miners also use renewable energy to power their equipment.

 

Can I mine Bitcoin with a normal PC or gaming PC?

• Unfortunately not. Mining Bitcoin requires ASICs, normal GPUs can not compete anymore. 

 

What is a miner pool?

• A group of miners who split the rewards of a block based on their contributed work

 

Can you mine Bitcoin at home or at school?

• The short answer is yes. However, solo mining is nearly impossible without industrial level equipment.

 

If you have your own mining hardware then it's best to join a mining pool?

• Joining a mining pool means you share the rewards of the block with other miners in your pool, but you have a much higher chance of winning the block.

Being profitable depends on:

• Your electricity cost (under $0.10/kWh is ideal)

• Current Bitcoin price (higher price = more profit)

• It is important to note that “cloud mining” or mining from you phone are typically scams.