Mining (Cryptocurrency)
Definition
The process of using computational power to validate blockchain transactions, secure the network, and earn newly created cryptocurrency as a reward.
Cryptocurrency mining is the mechanism that secures proof-of-work blockchains like Bitcoin. Miners compete to solve complex mathematical puzzles — the first to find a valid solution gets to add the next block of transactions to the blockchain and receive the block reward (currently 3.125 BTC as of the 2024 halving).
The mining process serves dual purposes: it validates and records transactions (maintaining the blockchain ledger) and creates new coins (the controlled monetary supply). Without miners, there would be no one to process transactions or secure the network against attacks.
Mining has evolved through several eras. CPU mining (2009-2010) let anyone mine with a laptop. GPU mining (2010-2013) used graphics cards for better performance. ASIC mining (2013-present) uses specialized chips designed solely for mining. Each era increased efficiency but also the capital required to compete.
The economics of mining depend on: hardware costs (ASICs cost $2,000-$15,000+), electricity costs (the dominant ongoing expense), Bitcoin price, network difficulty, and the block reward. Profitable mining typically requires electricity below $0.05/kWh. Many large operations locate near cheap hydroelectric, geothermal, or stranded natural gas sources.
The environmental impact of mining is debated. Bitcoin mining consumes roughly 150 TWh annually — comparable to some countries. Critics highlight the energy use; supporters note the increasing share of renewable energy (estimated at 50-60%) and argue the energy secures a trillion-dollar financial network.
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Frequently Asked Questions
Can I still mine Bitcoin at home?
It's generally not profitable for home miners due to high electricity costs and industrial competition. The initial ASIC investment ($3,000-$10,000+) plus residential electricity rates make ROI difficult. Mining pools and cloud mining offer alternatives but have their own costs and risks.
What happens when all Bitcoin is mined?
The last Bitcoin will be mined around 2140. After that, miners will be compensated solely through transaction fees rather than block rewards. The transition is gradual — each halving (every ~4 years) cuts the block reward in half, slowly shifting miner revenue toward transaction fees.