What Does the Bitcoin Mining Process Actually Look Like in Practice?

Cryptocurrency has had a hell of a year so far in 2021 and doesn’t look like it has any intention of stopping. In fact, cryptocurrency mining became so popular that it caused a global graphics card shortage.

If you’re new to the cryptocurrency business, you’ll likely have no idea how those two things relate. That’s why we’ve put together our helpful guide on the Bitcoin mining process for new bitcoin miners and those looking to learn more!

What Is Bitcoin Mining?

Bitcoin mining is a vital part of maintaining the currency’s legitimacy. This is because the Bitcoin mining process verifies bitcoin transactions and records them in the blockchain ledger.

Within the blockchain technology used with Bitcoin, all transactions are verified by Bitcoin users, as there is no centralized body. Instead, participants within the blockchain network verify transactions. These are what’s known as Bitcoin miners. 

The actual process that these miners are doing is solving complex maths. Although it’s worth noting, it isn’t actual people solving these problems—it’s their computers. It would take a human much, much longer to solve these math problems. 

Those who mine Bitcoin are rewarded for participating in the network, with Bitcoin. 

What Is the Bitcoin Mining Process?

With the overview of Bitcoin mining above, we can dive further into what the bitcoin mining process looks like. For this, there are three key concepts you need to understand. 

First, a public distributed ledger. This is the record of all transactions within the blockchain network.

Next up is SHA-256. This is a hash function that prevents unauthorized access to the blockchain, securing the network. The SHA-256 generates a hash value that cannot be altered.

Finally, proof of work. For miners, proof of work refers to the mathematical puzzle we referred to above. The objective for miners is to determine the nonce value. They use the SHA-256 hashing algorithm to solve this. 

While the Bitcoin mining process used to be achievable using a standard CPU, it’s not the case anymore. Miners now use dedicated Bitcoin mining hardware like the Antminer L7 from

Example of the Bitcoin Mining Process

It’s all a bit technical for new Bitcoin miners, so we’ll use an example.

Rex wants to transfer 5 Bitcoins to Taylor. The first step is the transaction data being shared with Bitcoin users from the memory pool. This is an unmined pool of memory transactions waiting for verification into a new block.

Bitcoin miners verify this transaction data using proof of work. The first miner to solve the puzzle shares the results across the nodes within the blockchain. These nodes approve the transaction and the block becomes valid and is added to the blockchain. 

The miner who solved the puzzle receives a Bitcoin block reward and Rex’s Bitcoins transfer to Taylor. 

More News on Cryptocurrency Markets

The Bitcoin mining process, though technical sounding, is quite simple when you wrap your head around the jargon. Bitcoin miners are a vital part of maintaining the security and validity of the blockchain network. They verify transactions and get an amount of Bitcoin for doing so.

You can learn more about cryptocurrency and keep up to date with the latest industry news on our blog.