Mining

Mining is the process by which new bitcoin is issued and transactions are confirmed. Miners assemble pending transactions into candidate blocks and race to find a valid proof-of-work hash; the winner adds the block to the chain and collects the block reward, currently 3.125 BTC plus transaction fees. A new block arrives roughly every 10 minutes.

Why it matters

Mining performs two jobs at once. It distributes new coins without any central issuer, on a schedule fixed since 2009, and it secures the ledger, since each block adds work an attacker would have to redo to rewrite history. The industry has evolved from hobbyist laptops to specialized ASIC hardware in warehouse-scale facilities that seek out the world's cheapest electricity, from stranded hydropower to flared natural gas. Because miners' revenue is set by the protocol and their costs are set by energy markets, mining margins are thin and relentlessly competitive, which continually pushes the industry toward efficiency.

In the gold vs bitcoin debate

The shared vocabulary is deliberate: bitcoin's designer described issuance through provable effort as analogous to gold mining. The economics differ in one crucial way. Gold miners produce roughly 3,000 to 3,600 tonnes per year, and higher prices draw more production out of the ground, expanding supply. Bitcoin miners collectively earn a fixed issuance no matter how many join, because the difficulty adjustment converts extra effort into security rather than extra coins. Both forms of mining consume real resources; only one can increase the amount of money that exists.