BITCOIN / MINING / PLAIN ENGLISH
Bitcoin mining combines specialised computing hardware, electricity and proof of work. Miners compete to produce valid blocks, while Bitcoin nodes independently check that those blocks obey the network rules.
START HERE / 01
Mining software selects valid transactions and arranges them into a proposed Bitcoin block.
ASIC hardware performs enormous numbers of hashing attempts while searching for a result below the network's current target.
When valid proof of work is found, the miner broadcasts the proposed block to the wider Bitcoin network.
PROOF OF WORK / 02
Mining hardware repeatedly hashes changing block data, producing a new candidate result each time.
Only a result satisfying Bitcoin's current proof-of-work target can be used to propose a valid block.
Bitcoin nodes can independently verify the proof of work and the contents of the proposed block.
CONSENSUS / 03
The miner performs proof of work and broadcasts a candidate block to the network.
Bitcoin nodes independently verify transactions, block structure and proof of work against the rules they enforce.
A block that violates those rules can be rejected regardless of how much mining work was performed to create it.
NEIL HAMSON / PRACTICAL EXPERIENCE
Ten Bitmain Antminer S9 machines formed the mining hardware used within the operation.
ASIC miners produce substantial heat and noise. Ventilation, airflow and the physical environment are part of running the hardware.
Mining combines hardware, networking, electrical power, cooling, monitoring and day-to-day operational management.
HARDWARE / 05
ASIC means application-specific integrated circuit. The hardware is engineered for a narrow, specialised task.
Hash rate describes how many hashing attempts mining hardware can perform over a given period.
More efficient mining hardware performs more computational work for the electricity it consumes.
ENERGY / 06
ASIC miners require a continuous electrical supply while they perform proof-of-work calculations.
Operating multiple miners means dealing with significant heat, making airflow and cooling part of the infrastructure.
Electricity price, hardware efficiency, network difficulty, Bitcoin price and transaction fees can all affect mining economics.
POOLS / 07
A solo miner performs proof of work independently and receives the block compensation if that miner finds a valid block.
With relatively little hash rate, successful blocks may be extremely infrequent.
Mining pools combine the work of many miners and distribute payments according to the pool's chosen reward system.
Pooling can make income more regular, but it does not remove the proof-of-work requirement.
INCENTIVE / 08
Bitcoin's rules allow each valid block to include a predetermined amount of newly issued bitcoin.
The miner can also receive transaction fees associated with transactions included in the block.
Bitcoin's block subsidy reduces over time according to its programmed issuance schedule.
DISTINCTION / 09
Bitcoin can be bought and owned without running mining hardware or participating directly in mining.
Mining requires specialised hardware, electricity and participation in the competitive proof-of-work process.
NEXT / 10
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