Bitcoin mining


Also found in: Dictionary.

Bitcoin mining

The process that adds new Bitcoin transactions to the distributed ledger known as the "blockchain." While there are thousands of nodes in the Bitcoin network that verify transactions and relay them to other nodes, a smaller number are also mining nodes. A newly verified transaction resides in the Bitcoin memory pool and waits until a miner retrieves it, adds it to a block and places that block on the blockchain. At that time, the transaction is confirmed, and when another block is added, the transaction is confirmed again and so on. At times, there can be traffic jams, and waiting for a transaction to be confirmed can take a while. See Bitcoin confirmation.

Miners Compete With Each Other
Miners compete to publish a new block of transactions by solving a mathematical puzzle. The puzzle takes a massive amount of calculations to solve and ensures that miners spend time and resources using specialized custom-designed hardware to perform trillions of calculations. Several years ago, anyone with a PC could participate. Today, it could take a regular desktop computer months to solve a puzzle, and it takes longer every year because the Bitcoin algorithm was designed to make it more difficult as time passes. Miners join pools to accomplish the task using specialized hardware known as "ASIC miners." Several pools are in China where electricity is less expensive, and as of 2018, the China-based Antpool processes a quarter of all transactions worldwide.

The first miner to solve the puzzle and provide "Proof-of-Work" (PoW) publishes the block and is rewarded with transaction fees and new Bitcoins that are automatically generated. If two miners solve the puzzle at the exact same time, the miner that did the most computational work is the winner. The extra work required is what keeps fraudulent miners away, because they might as well do valid Bitcoin processing and glean the profits. See proof of work algorithm and Bitcoin miner.

The Maximum Number of Bitcoins Is 21 Million
The total number of Bitcoins will be capped at 21M at some point during the year 2140. From then on, miners' revenue will come only from transaction fees. The Bitcoin algorithm ensures that the amount of new coins the miner generates for its own account slows down over time. For example, starting with 50 Bitcoins in 2009, by 2013, there were 10.6M Bitcoins in existence, and by 2018 roughly 16.8M. The first four years generated 10 million coins, but the subsequent five years only six million.

Bitcoin proponents claim that the capped total of coins is what makes Bitcoin sound 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.
References in periodicals archive ?
The current Bitcoin mining method, known as 'Proof of Work' is currently very costly and wasteful.
It is possible for Bitcoin mining device to be modified by miners in order to increase production, but the FCC did not claim that Rosario made any modifications to the device, which cost $450 when it was first released.
Bitcoin mining operations take a lot of effort and power, and the sheer amount of competition makes it difficult for newcomers to enter the race and profit.
After all bitcoin mining ceases, the only way a country in need of a credible currency will be able to obtain bitcoin is to buy it from existing holders.
8 million) in a stock offering and use some of the cash to invest in bitcoin mining machines.
Kodak also revealed plans at CES in Las Vegas on Tuesday to lease bitcoin mining capacity via a machine named the Kodak Kashminer.
Global Banking News-January 4, 2018--Chinese central bank wants bitcoin mining to be curbed
The PUD is getting indications of widespread use of bitcoin mining machines across the county by customers knowingly or unknowingly violating District policies for serving these energy intense loads.
And bitcoin mining (the process of generating a bitcoin) now consumes the same amount of electricity every year as Denmark - 33TWh, according to one recent report.
A property developer and invester by trade, Adrian Hibbert started investing in the digital currency in 2015 when he bought around $100,000 worth of Bitcoin mining programmes.
These systems will be designed to offer bitcoin mining servers with a backup system that will incorporate fail safe capabilities.