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What is crypto mining?
Mining is how networks like Bitcoin confirm transactions and create new coins without a bank in the middle. Computers around the world compete to solve a puzzle, and the winner adds the next page to a shared record.
What miners do
Confirming payments
Miners gather waiting transactions, check that nobody is spending coins twice, and pack them into a block.
Securing the network
Rewriting past blocks would mean redoing all the computing work behind them, which makes the history extremely costly to change.
Issuing new coins
There is no central bank. New coins enter circulation only as the reward paid to whoever mines the next block.
How it works, step by step
- 1
Someone sends a payment
The transaction is broadcast to computers around the world and waits in a queue called the mempool.
- 2
Miners build a block
Each miner picks transactions from the queue, usually the ones paying the highest fees, and bundles them into a candidate block.
- 3
The guessing race begins
Miners run the block through a hash function again and again, changing one number (the nonce) each time, looking for a result below a target set by the network. The only way to find it is trial and error, trillions of times per second.
- 4
One miner finds a valid hash
The winner announces the block. Every other computer can check the answer in a split second, even though finding it took enormous effort.
- 5
The block joins the chain
The block is added on top of the previous one. Its transactions are now confirmed, and each later block buries them deeper.
- 6
The winner gets paid
The miner collects newly created coins (the block reward) plus the fees from the transactions in the block. Then the race starts again.
Try it yourself
This is the puzzle in miniature. Your browser keeps changing the nonce until the hash starts with the number of zeros you choose.
Goal: a hash that starts with 000
- Nonce
- –
- Hash
- –
Each extra zero makes the search about 16 times longer. Change a single letter in the block and the winning number stops working, which is why a finished block is so hard to tamper with. This demo runs only in your browser and earns nothing.
Bitcoin mining in numbers
- ~10 min
- Average time between Bitcoin blocks
- 3.125 BTC
- Reward per block since the April 2024 halving
- 2,016 blocks
- How often the difficulty resets (about two weeks)
- 21 million
- The most bitcoin that will ever exist
What it takes to mine
Specialised hardware
Bitcoin is mined with ASICs: machines built to do one hashing job and nothing else. Ordinary laptops and phones cannot compete.
Cheap electricity
Power is the biggest running cost. The same machine can make money in one place and lose it in another, purely because of the electricity price.
A mining pool
A lone miner might wait years to win a block. Most join a pool that combines everyone's computing power and splits the rewards by contribution.
Cooling and upkeep
Machines run hot, day and night. They need ventilation, a steady connection and replacing every few years as newer models arrive.
Not every coin is mined
Mining belongs to proof-of-work networks. Many well-known coins work differently.
| Coin | Mined? | How it works |
|---|---|---|
| Bitcoin (BTC) | Yes | Proof of work (SHA-256), mined with ASICs. |
| Litecoin (LTC) and Dogecoin (DOGE) | Yes | Proof of work (Scrypt), usually mined together. |
| Monero (XMR) | Yes | Proof of work designed for ordinary computer processors. |
| Ethereum (ETH) | No | Switched to proof of stake in September 2022. Validators lock up ETH instead of running mining machines. |
| Tether (USDT) | No | A stablecoin issued by a company and backed by reserves. It was never mined. |
Costs and risks
Mining is a business with thin margins, not free money. Whether it pays depends on the coin price, the network difficulty and what the miner pays for power.
Prices move
Miners are paid in coins. If the price falls, the same work is worth less while the electricity bill stays the same.
Difficulty rises
When more miners join, the network makes the puzzle harder, so each machine earns a smaller share.
Rewards halve
Bitcoin's block reward is cut in half roughly every four years. The next halving is expected in 2028.
Hardware ages fast
A machine that is profitable today can be outclassed within a few years and worth little second-hand.
Glossary
- Blockchain
- A shared record of every transaction, stored as a chain of blocks that anyone can check.
- Hash
- A fixed-length fingerprint of some data. Change the data even slightly and the hash changes completely.
- Nonce
- The number miners keep changing to get a different hash for the same block.
- Hashrate
- How many guesses a machine, or the whole network, makes per second.
- Difficulty
- How hard the puzzle is. The network adjusts it so blocks keep arriving at a steady pace.
- Block reward
- The newly created coins paid to the miner of a block.
- Halving
- A scheduled cut of the block reward to half its previous size.
- Mining pool
- A group of miners who work together and share what they earn.
- Proof of work
- The system that makes miners spend real computing effort to add a block.
- Proof of stake
- An alternative with no mining: validators put up coins as collateral instead.
This page is general education, not investment advice. It explains how mining works on public networks and does not describe how Ocular Wealth plans generate returns.