What Is Bitcoin Mining?
Bitcoin mining is the process by which new bitcoins are created and transactions are verified on the Bitcoin network. It involves using powerful computers to solve complex mathematical puzzles and add new blocks to the blockchain. Here's a step-by-step overview of how the process works:
Transaction verification: When a Bitcoin transaction is made, it needs to be verified by the network to ensure that the sender has sufficient funds and that the transaction is valid.
Transaction grouping: Verified transactions are grouped together into a block, which contains a list of all the transactions that have been verified since the last block was added to the blockchain.
Block creation: Miners compete to create a new block by solving a complex mathematical puzzle. This involves using powerful computers to guess a random number that, when combined with the other data in the block, produces a hash (a string of letters and numbers) that meets certain criteria set by the Bitcoin protocol.
Block validation: Once a miner solves the puzzle, they broadcast the solution to the network. Other nodes on the network then verify that the solution is correct by checking the hash against the Bitcoin protocol's criteria.
Block addition: If the solution is verified, the new block is added to the blockchain, and the miner is rewarded with newly created bitcoins and any transaction fees that were included in the block.
How Does Difficulty Work?
The difficulty of the mathematical puzzle that miners need to solve is adjusted automatically every 2016 blocks, or roughly every two weeks, to ensure that the rate of block creation remains stable at around one block every 10 minutes. This difficulty adjustment also ensures that mining remains competitive and that the network remains secure.