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What really is Bitcoin Mining and How Does It Work?

Mining bitcoins is anything but a simple task, there are not many individuals who know how to mine bitcoins accurately, for that reason the universe of Bitcoin miners is limited. We will let you know the insider facts that numerous miners would rather not tell. What does bitcoin mining entail, and how does it work? We tell you everything you need to know.

What is Bitcoin Mining?

Bitcoin may be obtained in three ways: by acquiring it on an exchange, accepting it by trading it for products or services, or engaging as a miner in the currency market network. Mining is the process of adding transaction data to the Bitcoin public ledger known as the Blockchain. This occurs because every transaction can be validated, and every network user has access to this record. The mining process also provides for the keeping of a genuine record of transactions in order to establish which ones are real and which are being carried out despite not having the means to do so.

Mining – is a method of keeping records by utilizing computer processing capability.

Blockchain – a distributed public ledger that keeps track of each Bitcoin exchange.

This might pique your interest: How to buy Bitcoin: best practices, where to buy, tips

The name “Blockchain” comes from the fact that it is essentially a chain of blocks that hold listings of transactions done throughout a specific time period. Whenever a block of transactions is formed, it is processed by miners. They cut the sequence out of the block by applying a sophisticated mathematical procedure to the information in the block, resulting in a random pattern of alphanumeric characters known as a “hash.”

Hash- series of random numbers which are single and specified in length, may be formed from any size of data.

A hash not merely stores data from the transaction block, but also additional information too. Quite significantly, the prior block’s hash is included on the blockchain.

Although it is reasonably simple to generate a hash from a bunch of data in the form of a block of transactions, it is nearly hard to know what data was utilized just by a glance at the hash sequence. Furthermore, every hash in the network is distinct, and altering a specific character in a Bitcoin block entirely alters the hash sequence.

The hash will always be the same length, as seen in the sample above, regardless of how much data is provided as input.

The hash serves as a digital wax seal because of these properties. If a particular block of transactions is manipulated, its hash changes instantaneously, as do all following hash sequences on the blockchain. As a result, any effort at fraud inside the Bitcoin network would be quickly discovered by anyone who uses it.

To find out more: How Blockchain technology works? Beginner’s guide


The miners, in essence, serve the Bitcoin community by validating and verifying each transaction. Individuals are all competing against one another, using software designed expressly to mine blocks. When a new block is ‘sealed,’ it implies that a miner effectively generated a valid hash sequence, and they are rewarded for their efforts.

Since around October 2017, the reward is 12.5 Bitcoins per block, and yet this number will be reduced by 50% every 210,000 blocks, a process known as ” halving “.

The entire supply of Bitcoins is finite, which means that the more coins produced, the more valuable each one becomes in the realm of mining. As a result, while the number of Bitcoins each block may fall, the worth of the miners’ rewards in relation to FIAT money is expected to stay constant or even rise.

To find out more: How is the Bitcoin exchange rate calculated?

Hashing a collection of information is usually very easy, but the power of computers can do that very quickly. As a result, the Bitcoin network must purposefully make the process more difficult as processing power develops inside the network to prevent people from mining hundreds of transaction blocks per second and mining all accessible Bitcoins in a couple of minutes.


A needed ” Proof of Work ” is used to do this. It is a system that necessitates some effort from the service requestor, which often entails computer processing time. Generating proof of work is a random, low-probability procedure, which necessitates a lot of trial and error to obtain a legitimate proof of work. In the case of Bitcoin, the hash acts as proof of work.

Proof of work – a low-cost safeguard against fraudulent operations that necessitate some effort on the part of the service requester, usually in the form of computer processing time.

Bitcoin Difficulty is included in the process to make mining even more difficult. It’s a metric that compares how tough it is to discover a new block to how simple it may be.

Bitcoin difficulty – a metric that indicates how tough it is to produce a correct hash.

Every 2016 block, this metric is recalculated. It’s built to keep a block extraction time of around 10 minutes. Because more miners enter, the network’s processing power grows, causing the block creation rate to rise. The level of difficulty is recalculated and adjusted to accommodate for the pace of block production in order to regulate this. Anyone on the network will reject any block published by fraudulent miners that do not satisfy the requisite degree of difficulty, declaring it useless.

As a result, this procedure necessitates work, and the new currency is gradually made available as a result. New coins arise at the same rate as raw resources like gold are taken from the earth. As a result, the procedure is known as “mining.”

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