Mining is the mechanism of creating and adding new blocks to the blockchain, the ledger of cryptocurrency transactions. This process consists of solving complex mathematical problems: the calculations are performed by the miners, network nodes equipped with very powerful devices. In particular, the first one to find the solution can create the block and generally receives a reward.
Bitcoin mining, therefore, has three main functions:
- Validate transactions taking place on the network, recorded in the blocks
- Issuing new coins as rewards to miners, following a planned pace
- Ensuring the security of the blockchain, preventing manipulation and fraud
The mining difficulty increases as the total computing capacity (Hash Rate) of the Bitcoin network increases, and vice versa. This correction occurs every 2016 blocks and is done automatically by an algorithm. The amount of Bitcoins released as a reward to miners, on the other hand, is halved by the Halving mechanism every 210,000 blocks.
The mining process requires expensive power and hardware, although initially it was enough to use the CPU of a simple computer. In fact, today Bitcoin blocks are mainly mined by mining pools: systems composed of several devices, which combine their computing power.