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How Does Bitcoin Mining Work?
Bitcoin mining is the process of adding new transactions to Bitcoin blockchain. It's a tough job. People who choose to mine Bitcoin use a process called proof of work, deploying computers in a race to solve mathematical puzzles that verify transactions.
To entice miners to keep racing to solve the puzzles and support the overall system, the Bitcoin code rewards miners with new Bitcoins. "This is how new coins are created" and new transactions are added to the blockchain, says Okoro.
In the early days, it was possible for the average person to mine Bitcoin, but that's no longer the case. The Bitcoin code is written to make solving its puzzles more and more challenging over time, requiring more and more computing resources. Today, Bitcoin mining requires powerful computers and access to massive amounts of cheap electricity to be successful.
Bitcoin mining also pays less than it used to, making it even harder to recoup the rising computational and electrical costs. "In 2009, when this technology first came out, every time you got a stamp, you got a much larger amount of Bitcoin than you do today," says Flori Marquez, co-founder of BlockFi, a crypto wealth management company. "There are more and more transactions {now, so} the amount you get paid for each stamp is less and less." By 2140, it's estimated all Bitcoins will have entered circulation, meaning mining will release no new coins, and miners may instead have to rely on transaction fees.
To entice miners to keep racing to solve the puzzles and support the overall system, the Bitcoin code rewards miners with new Bitcoins. "This is how new coins are created" and new transactions are added to the blockchain, says Okoro.
In the early days, it was possible for the average person to mine Bitcoin, but that's no longer the case. The Bitcoin code is written to make solving its puzzles more and more challenging over time, requiring more and more computing resources. Today, Bitcoin mining requires powerful computers and access to massive amounts of cheap electricity to be successful.
Bitcoin mining also pays less than it used to, making it even harder to recoup the rising computational and electrical costs. "In 2009, when this technology first came out, every time you got a stamp, you got a much larger amount of Bitcoin than you do today," says Flori Marquez, co-founder of BlockFi, a crypto wealth management company. "There are more and more transactions {now, so} the amount you get paid for each stamp is less and less." By 2140, it's estimated all Bitcoins will have entered circulation, meaning mining will release no new coins, and miners may instead have to rely on transaction fees.
Bitcoin mining is the process by which new bitcoins are created and transactions are added to the blockchain. Miners use powerful computers to solve complex mathematical puzzles, validating transactions and securing the network. As a reward for their efforts, miners are issued new bitcoins. The difficulty of these puzzles adjusts to ensure a steady flow of new bitcoins, and the process is decentralized, preventing any single entity from controlling the currency. Bitcoin mining not only creates new coins but also plays a crucial role in maintaining the integrity and decentralization of the entire cryptocurrency system.
Jul 22, 2021 20:42