Mining is the process of using computational power to validate transactions and add new blocks to a blockchain, typically in Proof-of-Work (PoW) systems like Bitcoin. Miners compete to solve complex mathematical puzzles; the first to solve it gets to add the next block and earns a block reward (newly created cryptocurrency) plus transaction fees.

Mining requires specialized hardware (ASICs for Bitcoin, GPUs for some altcoins), significant electricity, and cooling infrastructure. As more miners join the network, difficulty increases, maintaining a consistent block production rate. Bitcoin's difficulty adjusts every 2,016 blocks (~2 weeks).

Key Characteristics of Mining

  • Proof of Work: Secures the blockchain through computational effort
  • Block Rewards: Miners earn new coins for successful mining (6.25 BTC per block as of 2024)
  • Transaction Fees: Additional income from fees paid by users
  • Difficulty Adjustment: Network automatically balances mining difficulty
  • Energy Intensive: Bitcoin mining consumes energy comparable to small countries

Real-World Example

A Bitcoin miner running an Antminer S19 Pro (110 TH/s) might earn approximately $10-15/day after electricity costs, depending on Bitcoin's price and network difficulty. Large mining operations run thousands of machines in locations with cheap electricity.

Understanding Mining is easier when you're familiar with these related concepts:

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