mining

Mining is the mechanism that keeps the Bitcoin network secure and decentralized. Miners are computers, or purpose-built machines called ASICs, that collect pending transactions and bundle them into a candidate block. To add that block to the blockchain, they must find a specific number called a nonce that, when combined with the block's data and run through the SHA-256 hashing algorithm, produces a result below a certain target. This process requires enormous computational effort and is intentionally designed to be difficult.

When a miner finds a valid solution, it broadcasts the block to the network. Other nodes verify the solution instantly and, if valid, accept the new block. The winning miner receives two things: the block subsidy, which is newly created bitcoin, and all the transaction fees included in that block. This reward is the only way new bitcoin enters circulation. The subsidy started at 50 BTC per block in 2009 and halves approximately every four years in an event called the halving. As of 2024, the subsidy is 3.125 BTC per block.

Mining also enforces the rules of Bitcoin without relying on any central authority. Because rewriting history would require redoing all the computational work that came after, the cost of attacking the network grows with its size. This is what makes Bitcoin records permanent. A transaction buried under many blocks is, for all practical purposes, irreversible.