What is Bitcoin Mining

You may ask yourself “where do Bitcoins come from ?”

Bitcoins aren’t printed out like traditional money, they are mined out of the system. A miner is just a person with a computer that runs a mining program on it. The reason it’s called mining is because:

  1. Just like any other natural resource, there is a finite amount of Bitcoins. So the maximum amount of Bitcoins that can be generated is 21 million. Until today over 12 million Bitcoins were mined.
  2. Just like real world mining, you need to invest energy in order to extract these Bitcoins. The miner’s computer needs to solve complex mathematical problems, and once it solves them – new Bitcoins are generated and awarded to him.


But miners don’t just generate new Bitcoins. They also use their computers to verify transactions and prevent fraud. So more miners means faster transaction verifications and less fraud. That’s why we want to compensate miners for their hard work.

When verifying a transaction the miner gets a small fee out of that transaction for his work. So Miners get paid twice – once for verifying the transactions and again when they successfully generate new Bitcoins. Sounds profitable ? Well….not so fast…

Satoshi, the guy who invented Bitcoin, wanted the number of Bitcoins that were mined each time to remain constant, no matter how many miners come aboard. That’s why the difficulty of mining increases as more miners join the network.

So if in 2009 you could mine 200 Bitcoins with your personal computer at home. In 2014 it will take you about 98 years to mine just 1…

That’s why ASIC miners were invented. Super powerful computers designed just for mining Bitcoins. But since so many miners have joined in the past few years it’s still almost impossible to mine alone. To solve this problem mining pools were invented. Groups of miners formed together to deal with the growing difficulty of Bitcoin mining. Each miner gets paid for his relative share of the work.

So that’s how Bitcoins are born, through miners…. 

Free Bitcoin Crash Course

Learn everything you need to know about Bitcoin in just 7 days. Daily videos sent straight to your inbox.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
We hate spam as much as you do. You can unsubscribe with one click.
We hate spam as much as you do. You can unsubscribe with one click.

27 comments on “What is Bitcoin Mining”

Leave a Comment

Your email address will not be published.

  1. So, Where is bitcoin mined from? There must be a source that it is being mined from. Who said that there are only 21 million bitcoin? And why? This smells of a scam

        1. Hi theQ,

          Well, Bitcoin miners attempt to solve a mathematical problem which is only solvable through making successive random guesses. You can imagine mining like a group of people competing to guess a random number between 1 and 1 million. Whenever a correct guess is made, whoever made it wins a prize (the block reward in Bitcoin) and an extra bonus (the fees for all the transactions they get to put into that block).

          So, this mining system is known as Proof of Work because we know that the only way to find a block is to guess, and guessing takes work as one must spend time and electricity and hardware to make that correct guess. This work requirement is what prevents someone from going back in time and rewriting the record of everyone’s transactions (the blockchain) to give themselves free bitcoins, for example.

          Hope it makes better sense now?

          Technically, what miners are using their mining power to derive is a certain hash result (starting with as many zeroes as the current difficulty setting dictates) for all the info in the current block. I can explain this in more technical detail if you like but it’s not necessary to understanding the whys and wherefores of mining.

Scroll to Top