SAM

· 09 Nov 2021

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How are bitcoin mined?

Bitcoin mining is the process through which bitcoins are released to come into circulation. Basically, it involves solving a computationally difficult puzzle to discover a new block, which is added to the blockchain and receiving a reward in the form of a few bitcoins.

The block reward was 50 new bitcoins in 2009; it decreases every four years. As more and more bitcoins are created, the difficulty of the mining process – that is, the amount of computing power involved – increases.
The mining difficulty began at 1.0 with Bitcoin's debut back in 2009; at the end of the year, it was only 1.18. As of April 2017, the mining difficulty is over 4.24 billion.
Once, an ordinary desktop computer sufficed for the mining process; now, to combat the difficulty level, miners must use faster hardware like Application-Specific Integrated Circuits (ASIC), more advanced processing units like Graphic Processing Units (GPUs), etc.
A new block is a file that has recently been added to Bitcoin's blockchain. It contains all recent Bitcoin transactions and a reference to the block that came immediately before it. By looking at the contents of a new block, we can get a rough idea of what is going on in Bitcoin right now.
- A new block
Mining is said to be successful when all the transactions in the block are recorded as Unspent Transaction Outputs (UTXOs) in the blockchain. As of April 2017, half of all bitcoins that will ever exist have been created. According to the current Bitcoin Protocol, 21 million is the maximum number of bitcoins that can exist. Satoshi Nakamoto, bitcoin's enigmatic founder, arrived at that number by assuming people would discover, or "mine," a certain number of blocks of transactions daily.
- Mining unspent transaction outputs
Bitcoin price can fluctuate: experts say it will rise, fall, and then rise again. There are many factors that may affect the Bitcoin price, such as increased regulation, security breaches, and more acceptance of the currency on a global scale resulting in a demand boost.

- Bitcoin price rise
Mining is the process of adding transaction records to Bitcoin's public ledger of past transactions (and a mining rig is a colloquial metaphor for a single computer system that performs the necessary computations for "mining". This ledger of past transactions is called the blockchain as it is a chain of blocks.