What is mining?

Oct 6
Networks of specialized computers create and issue new bitcoins as well as validate fresh transactions through the process of mining.
Bitcoin and some other cryptocurrencies employ the mining process to create a new currency and approve fresh transactions. Blockchains—virtual ledgers that record Bitcoin transactions—are verified and secured by massive, decentralized networks of computers located all over the world.
Computers on the network receive fresh coins in return for their processing power. The blockchain rewards coins, which in turn offer miners an incentive to support the network. It's a positive feedback loop.
The three major methods for obtaining Bitcoin and other cryptocurrencies are as follows. They are available for purchase on exchanges like Coinbase, as payment for products or services, or you can electronically "mine" them.

Ten years ago, anyone with a respectable home computer could participate in mining, but as the blockchain has expanded, so has the amount of computational power needed to maintain it. Therefore, it is unlikely that amateur Bitcoin mining will bring in money for enthusiasts. Nowadays, specialist businesses or groups of people who pool their resources perform nearly all of the mining.


The calculations required to validate and log each new Bitcoin transaction and maintain the blockchain's security are carried out by specialized computers. A significant amount of computational power is needed for blockchain validation, which miners willingly contribute.

Similar to managing a sizable data center, mining Bitcoin is similar. The value of the coins extracted must be greater than the cost of mining them for mining to be viable for the companies that buy the equipment and pay for the electricity required to operate and cool it.

What spurs miners on? Each computer on the network competes to be the first to guess a "hash," a 64-digit hexadecimal number. The faster the computer can guess, the better the miner's chances of winning a reward are.
The winner wins a fixed number of newly created bitcoins, on average this occurs every ten minutes, and updates the blockchain ledger with all of the newly confirmed transactions, adding a new verified "block" to the chain containing all of those transactions.

Only 21 million bitcoins will ever exist. Theoretically, 2140 should see the mining of the final block. From this point on, mining operations will be funded by the fees they charge to execute transactions rather than by freshly created Bitcoins as rewards.
Mining is essential to the security of Bitcoin and many other cryptocurrencies. In addition to putting new coins into circulation, it verifies and secures the blockchain, enabling cryptocurrencies to operate as a peer-to-peer decentralized network without the need for third-party control and providing miners with a financial incentive to contribute their computing power.

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