The cryptocurrency market is flooded with thousands of digital coins, but the most sought-after and expensive remains Bitcoin. The first cryptocurrency in the world is based on the principles of decentralization and security, which are ensured by the mining process. Mining is a resource-intensive procedure that involves powerful computing devices and complex algorithms.

Introduction to the Concept and Principles of Mining

Before we delve into the main topic, it's important to understand what blockchain is. Blockchain is a decentralized network consisting of individual blocks containing information about the internal operations of the Bitcoin network. They follow one another in chronological order. Each block contains a record of the preceding block. This is precisely why making any modifications to the chain is impossible — it would require rewriting it from the very beginning.

Mining is the process of supporting the operation of the blockchain and extracting new coins in networks that operate on the PoW (English: "Proof of Work") consensus algorithm. Bitcoin is a decentralized blockchain network, meaning it is not subject to any central authority. Nodes, or so-called miners, are responsible for processing, verifying, and adding transactions to blocks.

The tasks of the miner are as follows:

• Conducting transactions with deposits into the blockchain chain blocks. For each newly formed block, the miner is rewarded in bitcoins. He is also responsible for preventing double spending of coins;
• Maintaining the decentralized nature of the network. All nodes of the Bitcoin network store records of blockchain blocks, which eliminates the possibility of forgery. If necessary, each transaction can be verified;
• Mining new bitcoins. Currently, mining is the only available way to introduce new coins into circulation.

For verifying transactions and including information about them in a block, miners solve a complex problem using specialized computing hardware. This is called hash function mining.

The hash function converts data regardless of its volume into a standardized bit field. The idea is to find the hash of the header — a number of 64 characters, where the data about the previous block and the transactions included in it is encoded. The hash of the header is not solved like a mathematical problem. The search lies in simply iterating through possible combinations until the correct one is found.

The miner who discovers this number and adds a new block to the blockchain record receives a reward. This is a kind of motivation that encourages users to support the operation of the Bitcoin network.

Mining Equipment

Initially, bitcoin mining could be done on regular computers using the central processing unit (CPU). Over time, the requirements for computing power increased. Miners began to use graphics processing units (GPU), which turned out to be more efficient. 

Today, specialized powerful devices — ASIC (Application-Specific Integrated Circuit) — are mainly used for bitcoin mining, designed to perform hashing operations. Other mining methods are currently inefficient.

Mining pools

Due to the high complexity of bitcoin mining, it is becoming increasingly difficult for individual miners to compete with large mining farms. As a result, many of them are collaborating in pools. A pool is a group of miners who combine their computing power to increase the likelihood of finding a block. The reward received is distributed among the pool participants in proportion to their contribution to the overall hash rate.

Number of bitcoins mined per day

In each block of the Bitcoin blockchain, there are an average of 1000 to 4000 transactions. The average transaction size is about 226 bytes, and the block size is limited to 1 megabyte. A new block is added to the blockchain approximately every 10 minutes, for which a reward is given — currently, it is 3.125 BTC. On average, about 144 blocks are added to the chain each day, meaning approximately 450 BTC are issued daily.

Additionally, miners receive a small amount of BTC for processing each transaction. The fee size depends on the complexity of transactions: the more complex it is, the more can be earned.

Future of Bitcoin Mining

The difficulty of mining digital coins is increasing, while the rewards decrease with each halving. The era of 'home' miners has come to an end. In the future, new consensus methods or protocol changes may be developed for individual enthusiasts, making the process more accessible and environmentally friendly.

Currently, it is no longer enough to buy a couple of graphics cards, and expensive ASICs pay off on average within a year with minimal investments starting from a few thousand dollars. However, this does not mean that mining is fading into the past. It is still one of the most important parts of the Bitcoin blockchain network ecosystem, ensuring its stable and secure operation.

In the long term, bitcoin mining appears to be more reliable and profitable than mining most other digital coins. According to analysts' estimates, Bitcoin will remain in demand for at least several more decades, so the efforts of miners will continue to be rewarded.