How Bitcoin Works and the Mechanics of Mining

At its core, Bitcoin works through a process called mining. Bitcoin miners use their computational power to solve cryptographic puzzles that validate and secure transactions. In return for their work, miners receive newly minted bitcoins as a reward. This process ensures the integrity and immutability of Bitcoin’s blockchain, making it nearly impossible to manipulate transaction records.

Bitcoin mining is based on a Proof of Work (PoW) mechanism, which requires miners to expend computational power to solve complex cryptographic problems. These problems are generated by a hash function, and the difficulty of solving them adjusts over time to ensure that new blocks are added approximately every ten minutes. The computational power of miners is measured in hash rate (e.g., Antminer S19 Pro has a hash rate of 110 terahashes per second).

The network’s security depends on the combined computational power of all miners, and the difficulty of mining adjusts automatically based on the total network hash rate. This ensures that mining remains fair and that no single miner can control the network.

Bitcoin operates on a limited supply model, with a cap of 21 million BTC. To control inflation, Bitcoin rewards are halved approximately every four years in an event known as the "halving." As of 2022, the reward for solving a block is 6.25 BTC, and by 2140, the reward will be zero, meaning all 21 million BTC will have been mined.

Additionally, Bitcoin miners can group their resources into mining pools to increase their chances of solving a block and earning rewards. Transactions within each block are aggregated and recorded as immutable data, forming a transparent ledger that anyone can inspect.

Bitcoin's mining process makes it self-sustaining and decentralized, operating without the need for a central governing body, CEO, or customer support.