Bitcoin Mining

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Fundamental to Bitcoin and its underlying blockchain is the process of mining. Bitcoin miners are the ones who verify the transactions conducted using Bitcoin. In doing so, they add another “block” to the chain.


However, verifying transactions requires a tremendous amount of computing resources, and so “miners,” those who take on the task of verifying transactions – mining – are rewarded for their work; after they have mined a set amount of transactions, they will earn 1 Bitcoin.


Mining is also responsible for the generation of new Bitcoins, after a certain amount of blocks have been added to the chain, a new Bitcoin is generated and awarded to the miner.


The specifics of how mining works are complicated, but essentially, miners need to provide a 64 hexadecimal number (which means there are 64 digits and each digit could be one of 16 things, leading to trillions of possibilities.)


This number is associated with a transaction and can only be generated through a mathematical computation involving the numbers already stored on the chain. Massive computers try to figure out what this new number is, and the first one to figure it out is the one credited for verifying the transaction. In other words, they get credit towards their next Bitcoin.


If multiple miners arrive at the solution simultaneously, then there is a vote that takes place to determine who gets the credit. Usually, it goes to the miner who has the most transactions already worked.


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