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Topic: what I understand about bitcoin mining as a newbie (Read 110 times)

legendary
Activity: 1610
Merit: 1026


Bitcoin mining is the process of using computer power to solve complex mathematical problems in order to verify transactions on the Bitcoin network.

Miners are rewarded for their efforts with newly minted bitcoins and transaction fees.

The difficulty of the mathematical problems adjusts dynamically to ensure that the average time between mined blocks stays at about 10 minutes. As more miners join the network, the difficulty increases to maintain this average time.
This process helps to ensure the security and integrity of the Bitcoin network. The energy consumption of the bitcoin network is very high.
Bitcoin mining is not for beginners. The next halving is already close and many ASICs will become useless. It is better for a beginner to start with video cards or asics for other coins, which consume much less electricity and do not make noise. And you can use them in the apartment or on the balcony.
hero member
Activity: 784
Merit: 589
Venturing into Bitcoin mining can be quite hectic as the process can be tedious and discouraging sometimes, but when you consider the rewards attached; like the blocks of Bitcoin one gets after completing a complex mathematical problem, is enough to get one going. This link here can give more insight on what the stuff is all about  link
copper member
Activity: 1988
Merit: 905
Part of AOBT - English Translator to Indonesia
there is like thousand of topic like this but here https://www.youtube.com/results?search_query=what+is+bitcoin+mining you can find a dozen of video from plain English to advanced Youtube in my opinion always the best when it comes to learn about crypto  Grin
hero member
Activity: 504
Merit: 1065
Crypto Swap Exchange
To go further, you can start reading this : https://github.com/bitcoinbook/bitcoinbook/blob/develop/ch10.asciidoc (mastering Bitcoin - chapter 10)

It is too long to be fully pasted here.

Quote
The word "mining" is somewhat misleading. By evoking the extraction of precious metals, it focuses our attention on the reward for mining, the new bitcoin created in each block. Although mining is incentivized by this reward, the primary purpose of mining is not the reward or the generation of new coins. If you view mining only as the process by which coins are created, you are mistaking the means (incentives) as the goal of the process. Mining is the mechanism that underpins the decentralized clearinghouse, by which transactions are validated and cleared. Mining is the invention that makes bitcoin special, a decentralized security mechanism that is the basis for P2P digital cash.

Mining secures the Bitcoin system and enables the emergence of network-wide consensus without a central authority. The reward of newly minted coins and transaction fees is an incentive scheme that aligns the actions of miners with the security of the network, while simultaneously implementing the monetary supply.

Miners validate new transactions and record them on the global ledger. A new block, containing transactions that occurred since the last block, is "mined" every 10 minutes on average, thereby adding those transactions to the blockchain. Transactions that become part of a block and added to the blockchain are considered "confirmed," which allows the new owners of bitcoin to spend the bitcoin they received in those transactions.

Miners receive two types of rewards in return for the security provided by mining: new coins created with each new block, also known as a block reward or coinbase reward, and transaction fees from all the transactions included in the block. To earn this reward, miners compete to solve a difficult mathematical problem based on a cryptographic hash algorithm. The solution to the problem, called the Proof-of-Work, is included in the new block and acts as proof that the miner expended significant computing effort. The competition to solve the Proof-of-Work algorithm to earn the reward and the right to record transactions on the blockchain is the basis for bitcoin’s security model.

The process is called mining because the reward (new coin generation) is designed to simulate diminishing returns, just like mining for precious metals. Bitcoin’s money supply is created through mining, similar to how a central bank issues new money by printing bank notes. The maximum amount of newly created bitcoin a miner can add to a block decreases approximately every four years (or precisely every 210,000 blocks). It started at 50 bitcoin per block in January of 2009 and halved to 25 bitcoin per block in November of 2012. It halved to 12.5 bitcoin in July 2016 and again to 6.25 bitcoin in May 2020. Based on this formula, bitcoin mining rewards decrease exponentially until approximately the year 2140, when all bitcoin (20.99999998 million) will have been issued. After 2140, no new bitcoin will be issued.

Bitcoin miners also earn fees from transactions. Every transaction usually includes a transaction fee, in the form of a surplus of bitcoin between the transaction’s inputs and outputs. The winning bitcoin miner gets to "keep the change" on the transactions included in the winning block. Today, the fees represent 0.5% or less of a bitcoin miner’s income, the vast majority coming from the newly minted bitcoin. However, as the block reward decreases over time and the number of transactions per block increases, a greater proportion of bitcoin mining earnings will come from fees. Gradually, the mining reward will be dominated by transaction fees, which will form the primary incentive for miners. After 2140, the amount of new bitcoin in each block drops to zero and bitcoin mining will be incentivized only by transaction fees.
newbie
Activity: 28
Merit: 3


Bitcoin mining is the process of using computer power to solve complex mathematical problems in order to verify transactions on the Bitcoin network.

Miners are rewarded for their efforts with newly minted bitcoins and transaction fees.

The difficulty of the mathematical problems adjusts dynamically to ensure that the average time between mined blocks stays at about 10 minutes. As more miners join the network, the difficulty increases to maintain this average time.
This process helps to ensure the security and integrity of the Bitcoin network. The energy consumption of the bitcoin network is very high.
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