Bitcoin mining is the process of creating new bitcoin by solving puzzles. It consists of computing systems equipped with specialized chips competing to solve mathematical [1] puzzles. The first bitcoin miner, as these systems are called, to solve the puzzle is rewarded with Bitcoin. The mining process also confirms transactions figure 1 shown below on the cryptocurrency's network and makes them trustworthy.

Figure1: Bitcoin Mining

For a short time after Bitcoin was launched, it was mined on desktop computers with regular central processing units (CPU). But the process was extremely slow. Now the cryptocurrency is generated using large mining pools spread across many geographies. Bitcoin miners aggregate mining systems that consume massive amounts of electricity to mine the cryptocurrency.

The Bitcoin network is a globally distributed public ledger consisting of a giant list of timestamped transactions. For example, one [2] ledger entry might indicate that Person A sent 1 bitcoin to Person B at 10am on Monday. The ledger is updated approximately every 10 minutes by adding 'blocks' that contain a list of new transactions. The existence of the ledger, which is voluntarily stored by thousands of participants known as 'nodes,' allows anyone to see both the current state and complete history of bitcoin ownership.

Bitcoin mining serves several functions:

1. It is a method for distributing new coins.
2. It is part of a more complete system for ensuring only valid transactions are added to the blockchain.
3. It is a method for prioritizing transactions given limited throughput (it creates a fair market for limited block space).
4. It provides financial incentive for participants (miners) to dedicate resources to the network, and the resources dedicated help secure the network from attackers. Note that attackers here primarily refers to miners themselves.

Benefits of Bitcoin Mining:

The process of discovering new Bitcoin is described as mining because it resembles the process of mining for any other resource. With gold mining, miners search and dig through the earth in hopes of striking gold.

With Bitcoin, miners attempt to find Bitcoin through solving complex mathematical problems. Blockchain is the technology [3] that cryptocurrency is built on. It is a ledger that is publicly distributed and records every Bitcoin transaction.

It is literally a digital chain of blocks. Each block contains a group of Bitcoin transaction information. Miners add to the blockchain by using computer processing power to solve complex mathematical problems. Solving the problems will result in the block being successfully added to the chain. The miner who correctly solves the problem is awarded Bitcoin.

The above forms the basis of the complex process of Bitcoin mining. It helps keep the payment network secure and trustworthy. The network is built on a peer-to-peer network, meaning that every single miner across the globe is contributing their computing power to maintain the network, confirm its transactions, and keep them secure.

References:

1. https://www.investopedia.com/terms/b/bitcoin-mining.asp#:~:text=Key%20Takeaways%201%20Bitcoin%20mining%20is%20the%20process,using%20complex%20machinery%20to%20speed%20up%20mining%20operations.
2. https://www.bitcoin.com/get-started/what-is-bitcoin-mining/
3. https://corporatefinanceinstitute.com/resources/knowledge/other/bitcoin-mining/

Cite this article:

Nandhinidwaraka.S (2021) The Platform of Bitcoin Mining, Anatechmaz, pp. 45