Mining is done by Bitcoin miners, whose responsibility is to verify other bitcoin transactions, which users are rewarded for. Whilst also keeping transactions secure and reliable. And also the means through which new bitcoins are released.
Mining is the central mechanic behind the bitcoin economy, and despite the myth not anybody can become a miner. For starters, you have to have really fast computers, a lot of electricity and a desire to solve puzzles.
Due to the mining process, this involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle. With which also requires special hardware chips working constantly to solve the cryptographic puzzles that creates new blocks in the bitcoin ledger in exchange for the rights to newly created bitcoin.
Some of the steps to mining bitcoin entail:
- The transaction data in each batch is encrypted by a formula that can be unlocked only through trial-and-error guessing on a massive scale.
- The miners put large-scale computing power to work as they compete to be the first to solve it.
- If a miner’s answer is verified by others, the data is added to a linked chain of blocks of data and the miner is rewarded with newly issued Bitcoin.
- Also when the miners verify each other’s work every step of the way this is also how the system prevents cheating of spending the same bitcoin twice. Because every block contains data linking to earlier blocks, and an attempt to spend the same Bitcoin twice would mean revising many links in the chain.