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Bitcoin miningThe 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 2020, 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. The Bitcoin algorithm ensures that the amount of new coins the miner generates for its own account slows down over time. Starting with 50 bitcoins 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. After 2140, miners' revenue will come only 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 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 and cryptojacking.
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