What Is Bitcoin Mining and How Does It Work?
A plain-English breakdown of proof-of-work, blocks, and why miners are essential to the Bitcoin network.
The basics
Bitcoin mining is the process of using specialized computers to validate transactions and add new blocks to the Bitcoin blockchain. Miners compete to solve a complex mathematical puzzle -- the first to solve it gets to add the next block and earns a reward in BTC.
Why does it matter?
Mining secures the network. Without miners, there's no one to verify that transactions are legitimate. The more miners, the more secure Bitcoin becomes. In exchange for this security work, miners earn block rewards (currently 3.125 BTC per block) plus transaction fees.
The hardware
Modern mining uses ASIC (Application-Specific Integrated Circuit) machines -- purpose-built hardware designed solely for mining. These machines are vastly more efficient than GPUs or CPUs. The most popular models come from Bitmain (Antminer series) and MicroBT (Whatsminer series).
The economics
Mining profitability depends on three factors: your hashrate (computing power), your electricity cost, and the current network difficulty. Hosted mining at professional facilities dramatically reduces electricity costs -- the single biggest expense in any mining operation.