21 BTCMining
Mining is the work that adds new blocks to Bitcoin. Miners run special computers (ASICs) that guess numbers; the winner of each round earns the block subsidy and the fees.
Short definition
Using computing power to find valid blocks; secures the network and issues new coins.
What miners do
A miner takes waiting transactions from the Mempool, builds a block template with a coinbase paying itself, and hashes the header until it finds a Proof of work below the target. A valid block is broadcast and every node checks it before accepting it.
Revenue = subsidy + fees. The subsidy halves every 210,000 blocks (Halving), so fees are expected to matter more over time. Revenue per unit of hashrate per day is called hashprice.
Hardware
CPUs mined the first blocks; the first public GPU miner appeared in 2010, and since 2013 almost all hashing is done by ASICs, chips that only compute SHA-256. Efficiency is measured in joules per terahash (J/TH). Profitability depends mostly on the price of electricity.
Pools
A single machine might wait years for a block, so most miners join a Mining pool that splits rewards by contributed work using a payout scheme. Pools also choose which transactions go into blocks; Stratum V2 and DATUM let miners build their own templates.
See also
- Proof of workProof of work is how Bitcoin decides who adds the next block: miners spend electricity on guessing, and a correct guess is easy for everyone to check but expensive to produce.
- HashrateHashrate is how many guesses per second all Bitcoin miners make together. More hashrate means more energy protecting the network.
- Difficulty adjustmentEvery 2,016 blocks (about two weeks) Bitcoin makes mining harder or easier so that a block still arrives about every ten minutes on average.
- HalvingEvery 210,000 blocks, roughly every four years, the number of new bitcoins paid to miners per block is cut in half. This is how Bitcoin's supply is capped at 21 million.
- Mining poolA mining pool combines the hashrate of many miners so they get small, regular payouts instead of waiting years for a whole block.
- Stratum V2Stratum V2 is the newer protocol between miners and pools. It encrypts the connection, uses compact binary messages and, optionally, lets the miner rather than the pool choose which transactions go into a block.
- Pool payout schemes (PPS, PPLNS, FPPS, TIDES)A payout scheme is how a mining pool shares block rewards among its miners. The main question is who carries the luck: the pool (steady pay, higher fee) or the miners (variable pay, lower fee).
References
- Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System (2008) bitcoin.org
- Bitcoin developer guide: mining developer.bitcoin.org
- mempool.space mining dashboard mempool.space