What is Bitcoin Mining? Explained.

There tends to be a lot of confusion in newcomers when it comes to understanding how exactly a Bitcoin is Created, and where it comes from. Today we explain the process.



Bitcoin mining is the computer based process in which a Blockchain’s Nodes (Validators) produce new Bitcoin by solving Coding puzzles (finding the right block hash) in X amount of time, and approving the transactions.


The Bitcoin cryptocurrency is based on its decentralized Blockchain, which registers transactions. This Blockchain is Proof of work, which means that to validate its transactions you need to put your CPU to work to solve code and find the right block ID (Hash) before the other computers. You might be asking yourself, why would anybody participate in this process? Well, the reward for validating transactions and working on the blockchain is, you might have guessed this already, Bitcoin. New Bitcoins are generated by the Blockchain going forward and new blocks being created. This process is called Bitcoin Mining; the term is based on the comparison between mining gold and this digital version of the act.
Credit: Bitnovo Blog


Bitcoin Mining is based on P.O.W. (Proof of Work), and is identical to any other P.O.W. Chain. But other projects can have other methods of taking their Blockchain forward in a decentralized manner. 

The main alternative is Proof of Stake (P.O.S.), where to be a validator, you must have an X amount of the blockchain's native currency locked and staked, to assure your intentions converge with the well-being of the project. Rewards will stem from this staking. Other lesser known alternatives are Proof of elapsed time and Proof of Authority, which we will expand upon in our next "Explained" Articles. Another difference which has come to mainstream discourse's attention is of environmental nature; it has been noted that Proof of Work blockchains such as Bitcoin's have a greater impact on the earth's ecosystem than other, alternative types of blockchains, such as the ones mentioned above.