Bitcoin Mining is one of the most important elements in the crypto world. This process is essential for the Bitcoin system. On average, 144 blocks are mined each day with a reward of 6.25 BTC each. This means that, on average, 900 Bitcoins are mined per day, which shows the importance of this process for the Bitcoin network to operate properly.
When we talk about mining, we usually associate it with physical activities, such as gold mining. However, Bitcoins cannot be physically mined because they are digital assets. So why is this process called mining? Because the miners put into circulation Bitcoins of the finite production (21 million) that were not yet in the network.
What is Bitcoin Mining?
In order to complete this process, miners need special computers and require a lot of energy. Miners have a very important role in this process since their job is to verify all BTC transactions. Bitcoin operates under a decentralized system where there is no entity or authority that regulates the transactions made by its users. Therefore, miners help the system to function properly by creating validated transaction blocks that are included in the blockchain network.
One of Bitcoin Mining's main functions is to prevent cryptocurrencies from being duplicated or doublé-spending, as it is known in the crypto world. This happens when a person spends the same bitcoin twice. With FIAT money this does not happen since once it is spent, the bills and coins become the property of the person who made the sale. However, with Bitcoin, a user could create a copy of a token and send it to someone else while keeping the original. This is where miners are very important because their job is to make sure this doesn't happen.
The miners' work can be divided into two parts. The first one is to verify transactions to guarantee that there is no double-spending and that the system is in order. The second part of their work is more complicated. Once they have completed a transaction block, it must be added to the blockchain. However, to add it to the network, they must first solve a very complex mathematical problem, which is known as "proof of work."
When the miner has completed these two tasks, it means that he is eligible to receive a Bitcoin reward. This reward is previously established by the system and every 210,000 mined blocks it is reduced. When Bitcoin started in 2009, the reward for each block was 50 Bitcoins. Since then, there have been four halvings. The last one occurred in May of this year, which meant that the reward for each block is now 6.25 BTC.
This process is expected to continue until 2140 when all Bitcoins have been mined. When this happens, miners will be rewarded with a transaction fee that will be paid by all the users. The purpose of these fees will be to make sure that miners have enough incentives to keep working on the security and functionality of the Bitcoin network.
Bitcoin Mining is a vital process for Bitcoin and its system. It is also another example of the innovative system that cryptocurrencies offer to their users in comparison to other traditional methods. Despite the advantages this process offers, it can also have disadvantages such as costs and transaction times. This is why new generations of blockchain no longer use the mining system.