miner

Zoology

1. any of various insects or insect larvae that bore into and feed on plant tissues

2. Austral any of several honey-eaters of the genus Manorina, esp M. melanocephala (noisy miner), of scrub regions

Collins Discovery Encyclopedia, 1st edition © HarperCollins Publishers 2005

miner

[′mīn·ər]

(mining engineering)

A person engaged in removing ore, coal, or minerals from the earth.

A machine designed for automatic mining of an ore.

Bitcoin

(1) For a comparison of the two prominent blockchain platforms, see Bitcoin vs. Ethereum.

(2) In 2009, Bitcoin was launched as a "peer-to-peer electronic cash system" by a person with the alias Satoshi Nakamoto. The first cryptocurrency, Bitcoin spawned a revolution in finance (see Web 3.0). Although merchants increasingly accept Bitcoins as payment, many people buy and hold for speculation because the current price per coin is based on market demand (see hodling). Since its inception, the value of a single coin has skyrocketed, and thousands of other cryptocurrencies have been created. For a complete list, visit www.CoinmarketCap.com or www.CryptoCompare.com. See crypto craze and Bitcoin pizza.

Three Distinct Features
Three things set Bitcoin apart from money such as the dollar or Euro. The first is its decentralized architecture, which means there is no middleman such as a bank or government agency.

Secondly, the reason Bitcoin is called a cryptocurrency is because it uses cryptography to hide the actual identity of both parties. The transaction itself is public; for example, on June 1, 2019, Bitcoin address A sent 2.5 Bitcoins to Bitcoin address B. The parties are considered pseudonymous rather than truly anonymous because, although their names are not public, their Bitcoin addresses are (see Bitcoin address).

Bitcoin's blockchain architecture also uses cryptography to tie all transactions together in such a way that if any were to be altered it would be immediately known. Thousands of volunteers are constantly validating the integrity of the chain. Once a Bitcoin transaction has been confirmed, it cannot be altered and is considered irrefutable. See blockchain and cryptographic hash function.

Lastly, there is a maximum number of Bitcoins that come into existence every year, and as of 2021, there are approximately 18 million. In the year 2140, coin creation ceases. After that, there will never be more than 21 million Bitcoins in the world, and people believe this makes Bitcoin inflation proof. Bitcoin is also called "digital gold," because gold is often said to be a hedge against inflation. See Bitcoin mining and public key cryptography.

Underground and Above Board
Although used for clandestine transactions because of its pseudonymity (ransomware now demands payment in Bitcoin), more than 2,000 legitimate businesses in the U.S. and 15,000 worldwide accept Bitcoin. In 2021, Tesla added Bitcoin to its online order form but removed it soon after claiming the crypto uses too much of the world's electricity (see Bitcoin mining). See ransomware and Dark Web.

Anyone Can Buy, Transfer and Sell Bitcoins
Users access their coins from a digital wallet in their own device or employ the services of a cryptocurrency exchange. Once an account is established, coins are bought with national currencies, and a fee is paid for every Bitcoin transaction. See Bitcoin wallet, Bitcoin exchange and Bitcoin ATM.

Extremely Volatile
Like a share of stock, the value of a Bitcoin fluctuates on the crypto exchanges with huge volatility. However, even with the gigantic dip in 2018, a single coin rose from virtually nothing to more than $60,000 in 10 years, creating a market cap of more than $1 trillion. It since dropped into the $40-50,000 range. See Bitcoin pizza.

Bitcoin Split
In 2017, Bitcoin split into three versions, and the original Bitcoin was enhanced for performance (see Bitcoin Cash, Bitcoin Gold and SegWit).

Bitcoins Are Mined!
The unusual thing about Bitcoins is the way they come into existence. Bitcoin "miners" compete with each other to update the blockchain with new transactions, and they are rewarded with Bitcoins created "out of the blue" for their own account. See Bitcoin mining.

Traction - Then Hacking
In late 2010, Bitcoin was becoming popular in the open source and underground communities. By mid-2011, there was an attack on the Japan-based Mt. Gox exchange, and a hacker extracted coins worth nearly $450M. See Mt. Gox.

Who Is Satoshi Nakamoto?
Nakamoto's true identity has never been disclosed. However, no matter who Satoshi Nakamoto is, in order to commemorate the developer, the smallest fraction of a Bitcoin is called a "Satoshi." See Satoshi and Satoshi Nakamoto.

Government Printing vs. Bitcoin Generation
When people argue that Bitcoins are no less valid than the U.S. dollar, there is a distinction to note. Bitcoins have nothing to back them up but the faith of the people using them. Although the same might be said of U.S. currency, the United States has the IRS and other federal agencies to ensure that people pay taxes. Nevertheless, proponents claim that Bitcoin and other blockchain-based platforms are revolutionizing all kinds of transactions worldwide. For more information, visit www.Bitcoin.org, www.Bitcoincharts.com, www.blockchain.info and http://en.Bitcoin.it. See BIP, Bitcoin transaction, Bitcoin vs. Ethereum, stablecoin, Silk Road and crypto glossary.

Nakamoto's Own Words

Perhaps nobody can describe Bitcoin better than its inventor. The following abstract appeared online on October 31, 2008, shortly before Bitcoin was launched.

Bitcoin: A Peer-to-Peer Electronic Cash System
"A purely peer-to-peer version of electronic cash would allow online payments to be sent from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone." See double spending.

Essential Reading for Enthusiasts

Books by Andreas Antonopoulos are incredibly thorough, and this one is no exception. If you want to know the ins and outs of Bitcoin, this is must reading.

Bitcoin mining

Bitcoin mining is 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.

Like a gold mine, which takes work and time to produce results, Bitcoin mining requires "digital work" and "processing time" to bring coins into creation. Hence the "mining" metaphor. However, this processing time uses an enormous amount of electricity worldwide (see cryptographic hash function). See blockchain.

While there are tens of thousands of nodes in the Bitcoin network that verify transactions, a smaller number are mining nodes. New transactions reside in the Bitcoin memory pool (mempool) until a miner retrieves them, verifies the integrity of their format and is the first to complete a mathematical puzzle, which takes about 10 minutes. The winning miner places the transactions in a block and adds them to the blockchain. Each new block provides more confirmation of the previous transactions (see Bitcoin confirmation).

Miners Are Rewarded with Bitcoins
The mathematical puzzle takes a gigantic amount of calculations to solve and ensures that miners spend time and resources, thus providing "proof-of-work" (PoW). The first miner to solve the puzzle and publish the block to the blockchain is rewarded with fees and new Bitcoins (see 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.

Years ago, anyone with a PC could be a miner. However, the Bitcoin algorithm was designed to be more difficult as time passes. Today, it could take a regular PC so long to solve the puzzle that it would never be first to do so. However, PCs can still be used for other cryptos (see pool mining).

Chinese Mining Pools
Organizations create huge mining pools to accomplish the task using specialized "ASIC miner" hardware. Located in China where electricity is less expensive, pools mine roughly 65% of Bitcoin transactions worldwide. In 2021, China started to crack down on Bitcoin trading and mining, and China-based miners are packing up and 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. At some point in 2140, the total number of coins will be capped at 21 million. Starting with 50 coins in 2009, by 2013, there were 10.6M Bitcoins in existence, and by 2020 roughly 17M. 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 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.

CleanSpark Bitcoin Miner

Headquartered in Henderson, Nevada, CleanSpark is a renewable energy company that features residential and commercial solar systems. It also uses its facilities to mine Bitcoin in New York state and Georgia. (Images courtesy of CleanSpark.)

crypto mining

(CRYPTOcurrency mining) The competitive process that verifies and adds new transactions to the blockchain for a cryptocurrency that uses the proof-of-work (PoW) method. The miner that wins the competition is rewarded with some amount of the currency and/or transaction fees. Following are the ways mining is performed. See proof-of-work algorithm.

Individual Miners
Anyone can purchase specialized miner hardware and connect to the Internet. This was more feasible in the early 2010s than it is today. However, new currencies come online all the time, and if they employ the proof-of-work (PoW) method rather than proof-of-stake (PoS), regular computers or computers with high-end GPUs may be sufficient for mining. See miner hardware and GPU.

Mining Pools
Organizations combine their resources to obtain a huge amount of mining hardware. Mining pools are also open to the public, whereby anyone can add their computers to the network.See pool mining.

Cloud Mining
People can rent time on a cloud mining service and pay a monthly fee. See cloud mining.

Mining Energy
The puzzle that miners attempt to solve for Bitcoin and Ethereum, the two major cryptos, consumes a lot of electricity. Known as the "proof-of-work" consensus algorithm, the Digiconomist website (www.digiconomist.net) says Bitcoin and Ethereum together consume as much energy as Indonesia. However, Ethereum is changing its consensus method, which began in late 2020 (see Ethereum 2.0). Contrast with crypto minting. See consensus mechanism, blockchain, Bitcoin mining and cryptojacking.

Everything About Mining

Peter Kent and Tyler Bain explore crypto mining in depth. For anyone who wants to know the ins and outs of this complicated business, their book is must reading.

miner hardware

The equipment required to mine cryptocurrencies, which is the competitive process of verifying and adding new transactions to a blockchain. Major cryptos such as Bitcoin and Ethereum require specialized hardware using custom-made ASIC chips. These ASIC rigs are plugged into the Internet, turned on and left to mine crypto. They also use a huge amount of electricity.

Regular Computers and GPUs
Cryptocurrencies are coming online constantly, and these new cryptos can sometimes be mined with everyday computers or computers with stand-alone GPU cards installed.

Proof-of-Work Processing
The competitive process is performed by calculating quadrillions of mathematical transformations known as hashes. The hash rate of a computer, GPU or ASIC rig determines how successful a user will be in earning the block subsidy by winning the competition. See hash rate.

The Bitmain ASIC Miner

Custom made for computing blockchain hashes, the Antminer S9 was one of the fastest ASIC miner machines on the market in 2017. ASIC miners such as this use a whole lot more power than an ordinary PC, and this unit requires a stand-alone 1600 watt power supply. (Image courtesy of Bitmain Technologies, www.bitmain.com)

Miner Motherboard

In 2018, Asus introduced its H370 Mining Master motherboard with support for 20 graphics cards via USB riser cables. (Image courtesy of ASUSTeK Computer Inc., www.asus.com)

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