Today, we’re going to dive deeper into the world of bitcoin mining and how it works. If this is something that interests you, make sure to take some notes down because this can be a bit tricky.
What is Bitcoin Mining?
When you talk about bitcoin mining, do you imagine a person looking for bitcoin in the ground or in a cave? If so, then you’re kind of wrong and right at the same time! Similar to where people mine for gold, people who generate bitcoin are called ‘miners’ because while gold is hidden inside rocks, bitcoins are hidden inside data blocks. While people use pickaxes to mine for gold, the tool of choice for bitcoin miners use is a special algorithm that its founder designed.
But before we go even further, we need to talk about what “nodes” are.
What are Nodes?
Nodes are powerful processors that run the Bitcoin software and they also help by relaying information. The Bitcoin software is free for everyone to download and use. The drawback of it, however, is that it consumes an insane amount of energy and storage space.
These nodes relay information of transactions throughout the network. One node will send information to the nodes that it knows, who in turn, will relay the information back to the nodes they know as well. Think of it as gossip that goes around a high school, it spreads like a wildfire until basically, the whole school knows it. The nodes relay information that way, only it’s a lot faster.
Some nodes are mining nodes, A.K.A “miners”. They group the transactions made by the nodes into blocks and adds them to the blockchain, which is done by solving an extremely complicated mathematical puzzle that is part of the bitcoin program. Basically, the puzzle that needs to be solved is finding a number that, when you combine it with the data in the block and pass through a hash function, produces a result that is within a certain range. And how do they hit a number of that range? They guess randomly!
How Bitcoin Mining Works
To put it in simpler terms, miners randomly guess a mystery number called a “nonce” and combine it with data in the block, and then apply the hash function. The resulting hash starts with a set number of zeroes. There’s really no way of knowing which number would work because two consecutive integers will give wildly varying results. There may be nonces that work, and some that might not work at all.
Because miners usually work in groups called ‘mining pools’, they all work on the same block at the same time. The first miner among them to solve the puzzle wins 1st place and gets a wad of bitcoins as a reward!
Bitcoin mining can really be a lot to take in! There are still so many aspects of it that we didn’t get to touch on. If you’re wishing for a more visual presentation of the topic, feel free to watch our video of the same name by clicking the video below!