Mining bitcoins is the process by which new transactions are added to the Bitcoin blockchain, allowing new bitcoins to enter circulation. Miners use specialized hardware to solve complex mathematical problems that validate transactions and secure the network. This effort not only ensures the integrity and security of the system, but also rewards miners with new bitcoins. This is how miners “earn their keep.”
Do you want to get started in the world of Bitcoin and don't know how? Mining bitcoins today is very complicated, as we will see below, but you can discover everything you need about Bitcoin in our Bitcoin Basic Course, free, where we guide you step by step to become an expert. We.
How does Bitcoin mining work?
El mining process It consists of miners competing to solve extremely difficult mathematical problems. The first to solve the problem adds a new block to the blockchain and receives a reward in bitcoins. This cycle repeats approximately every 10 minutes, keeping the Bitcoin network secure and decentralized. Furthermore, these miners also receive rewards for validating transactions on the network. These commissions are what are called «gas fees«.
Another factor that enters into the equation is that the number of bitcoins released as a reward for the work done is limited in the software and decreases by half every 210.000 blocks through a process called halving. In 2024 the last one occurred, capping the reward at 3,125 BTC for each mined block. If you want to know more about how this process works, here is an article about what is bitcoin halving.
Certificate
Tip for experts
“The network timestamps transactions as they are hashed (does a cryptographic transformation) within a continuous chain of hash-based proof-of-work. A record is built up that cannot be changed without redoing the proof of work. The longest chain not only serves as proof of the sequence of events that occurred, but also as proof that it came from the largest set of CPU power. As long as the highest CPU power is controlled by nodes that are not cooperating to attack the network, they will generate the longest chain and outrun the attackers."
Satoshi Nakamoto in the Bitcoin Whitepaper
How to be a bitcoin miner
El bitcoin mining process It's always the same: miners receive a new math problem every ten minutes and the fastest to solve it wins the new coins that are put into circulation.
This mathematical problem is based on random calculations that aim to find the solution and thus obtain block validation. Whoever cracks this gets the reward, as long as the rest of the network members confirm that the answer is correct.
Before continuing, we recommend that you review what a mining rig to continue understanding how to proceed to mine Bitcoin and obtain a good performance.
Role of mining
Because cryptocurrencies are a decentralized system, we need a formula that allows us to check all the operations carried out. The mining mission is vital to prevent someone from using the same amount of Bitcoin more than once or being able to introduce fake coins to the market.
Thus, the miners review the transactions and gather the last ones that have been generated in a group called block. The set of blocks could be compared to the set of pages of a ledger (ledger) or ledger, which certifies all the movements and the balance of the users.
Mining pool
The more computing power you have, the easier it is to solve a block and therefore get a reward. For this reason they created the mining pools, to carry out joint work and obtain a fair reward among all members for the work done.
Joining a pool guarantees us more chances to solve a block and get the reward. If we did it individually, we might never get a reward, either by sheer chance or because we had less computing power than the competition.
So partnering with other users who contribute mining machines ensures that we are more likely to get a reward.
The reward for the miner
As we have explained before, we have to take into account that each 210.000 blocks, the amount of Bitcoin offered as a reward is halved, something known as halving. This implies that the value of each Bitcoin has to increase for mining to continue to be profitable.
Within the Bitcoin code it is established that when a block is validated, a certain amount of coins is obtained. Currently, 3,125 BTC is earned for each new block validated. We must bear in mind that the commissions for each of the transactions are added to this fixed amount of Bitcoin. Additionally, it is important to note that, depending on the dynamic difficulty of the blockchain, the mining of each block happens approximately every ten minutes.
Tip for experts
By convention, the first transaction in the block is a special transaction that generates a new coin owned by the block creator. This adds an incentive for nodes to support the network, provides an initial way to distribute and circulate the coins since there is no authority to create them. This steady addition of a constant amount of new coins is analogous to gold miners spending resources to get gold into circulation. In our case, the resources are the CPU time and electricity that are spent."
Satoshi Nakamoto in the Bitcoin Whitepaper
What do I need to mine bitcoin?
The first bitcoins were mined using the processors or CPUs of computer equipment because very few people were mining. In fact, initially only Satoshi Nakamoto mined on the Bitcoin network and other miners gradually joined the process. But as people joined mining, the difficulty increased due to the increase in computing power of the network, a situation that made it very difficult to obtain a reward. This is how the jump to graphics cards occurred because the GPU (graphics processor) have more computing power than the processor.
On December 16, 2009, version 0.2 of the Bitcoin software was released, which incorporated an interesting novelty, which is that it allowed the use of several processors in the same system.
What Bitcoin's v0.2 enabled was the development of specialized machines for computing: the ASICs. Basically, an ASIC is a specialized computer that has many processors. The computing power of each of these systems is much higher and it made mining using graphics cards completely obsolete. Although an ASIC cannot serve us like a normal PC, it can perfectly execute the necessary instructions to carry out mining, extremely efficiently.
Difficulty and hash rate
We must understand that the more computer equipment is added to the network, the more its computing capacity increases. And at the same time, more competition is concentrated to obtain a reward.
La difficulty it is the necessary calculation to guarantee that the blocks are obtained every ten minutes. If new blocks were suddenly generated in less than 10 minutes on average over 2.016 blocks, Bitcoin would automatically reset itself to increase the complexity of the problem. The opposite would happen if the average in those 2.016 blocks exceeded 10 minutes.
Thehash rate on the other hand, it is the processing capacity of the Bitcoin network for each of the computers that are added to it. The sum of the power of all the computers in the network gives us the total hash rate in the network.
Bitcoin mining profitability
Depending on the power of the ASIC we have and the pool we are in, we will have more or less possibilities of obtaining Bitcoin. Profitability depends on the value of Bitcoin, the difficulty of the network and the determining factor: the cost of electricity.
The price of electricity will be the one that really determines if it is viable or not to mine Bitcoin, that is, if we will obtain compensation for the work done. Large mining farms are usually installed in countries or areas where there is access to cheap electricity, especially based on renewable energy, mainly hydraulic. Unfortunately in Spain, the high cost of electricity makes it practically unfeasible to mine Bitcoin.
How much does a bitcoin miner earn?
We must not only take into account the direct electricity necessary to power the miner's equipment. We also need to cool all the heat they generate, so the electrical cost goes up significantly.
We must take into account the cost of acquiring the equipment and the competition. What is the same: the number of machines that are operating in the network and that tends to increase over time. This can cause our mining operation together with the electrical cost to be profitable or not.
Finally, the development of new specialized systems must be taken into account. Bitcoin mining systems are still under development and this may mean that our ASIC is obsolete at any time or, in other words, profitability is reduced.
And all this for what?
All the work miners do creating new bitcoins and validating transactions makes sense so you can fully enjoy the Bitcoin experience.
If you are thinking of buying your first Bitcoin satoshis you can do so at Bit2Me, where you also have an exclusive promotion waiting for you.
Click here to open your user account in Spanish for FREE and securely and receive a €15 gift.
Author
