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Bitcoin (BTC) was introduced in early 2009 on a decentralized network that supports digital money — the BTC coin — which is independent from the control of governments, central banks or any other centralized entity. BTC is a supply-capped digital asset created only through the mining process. Mining is also responsible for adding new blocks of transactions to the blockchain’s immutable ledger of records. Central in generating new BTC and appending new blocks to the ledger are Bitcoin mining nodes, specialized network nodes that use their computers’ processing power to perform significant computational work through the proof of work (PoW) procedure. PoW allows them to create new blocks and receive rewards in the form of BTC, as detailed in our guide, Bitcoin blockchain explained.
In this article, we’ll explore the Bitcoin mining process and the details of the PoW system. We’ll also examine block rewards, the BTC reward halving mechanism and the costs of operating a mining node. In short, this guide is designed to be your comprehensive introduction to Bitcoin mining and the mechanics of BTC issuance.
Key Takeaways:
Bitcoin mining refers to the process used to issue new BTC coins into circulation and add new transaction blocks to the network’s ledger of records.
In the course of mining, specialized network nodes called miners use the computing power of their machines to try to solve a mathematical puzzle. The first miner to solve the puzzle gets the right to add the next block to the ledger, and to claim a reward payable in newly issued BTC.