Term of the Moment
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Definition: Bitcoin mining
The process that adds new Bitcoin transactions to the distributed ledger known as the "blockchain." Mining is also how new coins come into existence as a reward for being the first miner to add the next block of transactions to the blockchain.
Miners Are Rewarded with Bitcoins
The mathematical puzzle takes a gigantic amount of calculations to solve and ensures that miners spend resources, thus providing "proof-of-work" (PoW). The first miner to solve the puzzle and publish the block to the blockchain is rewarded with the transaction fees and new bitcoins (see crypto block reward). If two miners solve the puzzle at the exact same time, the miner that did the most computational work is the winner. The massive digital processing required also keeps fraudulent miners away. See proof-of-work algorithm and Bitcoin halving.
Chinese Pools Were the Largest
Organizations create huge mining pools to accomplish the task using specialized "ASIC miner" hardware. Located in China where electricity is less expensive, pools mined roughly 65% of Bitcoin transactions worldwide. However, in 2021, China cracked down on Bitcoin trading and mining, and China-based miners began moving to Central Asia and North America. See miner hardware and cryptographic hash function.
The Maximum Number of Bitcoins Is 21 Million
The Bitcoin algorithm ensures that the number of new coins miners generate for their own accounts slows down over time (see Bitcoin halving). At some point in 2140, the total number of coins will be capped at 21 million. Starting with 50 coins in 2009, the first four years generated 10 million coins, but the subsequent five years only six million more. After 2140, the only revenue miners will receive is from transaction fees. See crypto block reward.
The Cap Is a Major Feature
Bitcoin proponents claim that the capped total of coins is what makes Bitcoin valid money, similar to having physical gold bars. Just like an ounce of gold, the market may change its daily value, but a devaluation cannot occur due to inflating the money supply. See Bitcoin, cryptojacking and crypto glossary.
Mining Bitcoins in Fort Worth, Texas
CleanSpark Bitcoin Miner
Miners Are Rewarded with Bitcoins
The mathematical puzzle takes a gigantic amount of calculations to solve and ensures that miners spend resources, thus providing "proof-of-work" (PoW). The first miner to solve the puzzle and publish the block to the blockchain is rewarded with the transaction fees and new bitcoins (see crypto block reward). If two miners solve the puzzle at the exact same time, the miner that did the most computational work is the winner. The massive digital processing required also keeps fraudulent miners away. See proof-of-work algorithm and Bitcoin halving.
Chinese Pools Were the Largest
Organizations create huge mining pools to accomplish the task using specialized "ASIC miner" hardware. Located in China where electricity is less expensive, pools mined roughly 65% of Bitcoin transactions worldwide. However, in 2021, China cracked down on Bitcoin trading and mining, and China-based miners began moving to Central Asia and North America. See miner hardware and cryptographic hash function.
The Maximum Number of Bitcoins Is 21 Million
The Bitcoin algorithm ensures that the number of new coins miners generate for their own accounts slows down over time (see Bitcoin halving). At some point in 2140, the total number of coins will be capped at 21 million. Starting with 50 coins in 2009, the first four years generated 10 million coins, but the subsequent five years only six million more. After 2140, the only revenue miners will receive is from transaction fees. See crypto block reward.
The Cap Is a Major Feature
Bitcoin proponents claim that the capped total of coins is what makes Bitcoin valid money, similar to having physical gold bars. Just like an ounce of gold, the market may change its daily value, but a devaluation cannot occur due to inflating the money supply. See Bitcoin, cryptojacking and crypto glossary.
In April 2022, mayor Mattie Parker explained on CNBC Business News how the city started out with three mining rigs to earn money mining bitcoins. After the Chinese cracked down on miners, politicians in the state claimed they wanted Texas to be the "Bitcoin mining capital" of the world, but problems with the electrical grid may foil that desire. (Image courtesy of CNBC Business News.)
A renewable energy company featuring residential and commercial solar systems, CleanSpark is one of the top U.S. miners with more than 30,000 mining rigs in Georgia and upstate New York. See miner hardware. (Images courtesy of CleanSpark.)