Mining
Mining is the process where computers compete for the right to write the next block and are paid in new coins for it. The winner is decided by grinding through candidates, meaning by electricity spent, not by a vote.
How it works
A miner gathers transactions into a block and searches for a number that makes the block's hash fall below a target. It cannot be reasoned out, only tried, billions of attempts a second. Whoever finds it announces the solution, and everyone else verifies it instantly in a single operation.
Difficulty readjusts every 2,016 blocks, roughly once a fortnight, so blocks keep arriving every ten minutes no matter how much hashpower has joined the network or left it.
That expense is the point: rewriting history means redoing all that work faster than the rest of the network extends it. Bitcoin's security is not a prohibition but a price on attacking it.
A miner's economics
A 200 TH/s rig draws 3.5 kW. Electricity costs $0.08 per kWh.
| Draw per day | 3.5 × 24 = 84 kWh |
| Electricity cost | 84 × $0.08 |
| Cost per day | $6.72 |
Mining pays only while a day's output is worth more than that $6.72 plus wear on the hardware. So when the price falls, the miners with the dearest electricity switch off first, difficulty then drops, and margin returns for the rest.
What to keep in mind
- Solo mining does not find blocksOne rig against the whole network finds a block once in decades. That is why miners join pools, where the reward is split by contribution.
- Home bitcoin mining is overCompeting with industrial sites on cheap power, using a graphics card or a home ASIC, stopped being possible years ago.
- Hardware agesNewer models are more efficient and push older ones out even while they still run. This is a business with depreciation, not a one-off purchase.
- Not every network is minedEthereum moved to Proof-of-Stake in 2022: there blocks come from validators with locked coins, not from miners.