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What is the principle of Bitcoin mining? There are many novices who have just entered the currency circle and know nothing about Bitcoin mining, but they still cannot resist the temptation of Bitcoin prices, and they plan to join the mining army. If you want to obtain Bitcoins through mining, you must first understand Bitcoin mining. Mining principle, then, what is the principle of Bitcoin mining? The editor of the currency circle will introduce it to you below!

## Explanation of Bitcoin Mining Principles

Anyone can become a Bitcoin miner by running software on specialized hardware. Mining software listens for transaction broadcasts through the P2P network and performs appropriate tasks to process and confirm these transactions. Bitcoin miners who complete these tasks can earn transaction fees paid by users to speed up transaction processing and additional Bitcoins issued according to a fixed formula.

New transactions need to be included in a block with mathematical proof of work to be confirmed. This proof is difficult to generate because it can only be produced by trying billions of calculations per second. Miners need to run these calculations before their block is accepted and they receive their reward. As more people start mining, the difficulty of finding valid blocks is automatically increased by the network to ensure that the average time to find a block remains at 10 minutes. Therefore, mining is very competitive, and no individual miner can control what is included in the blockchain.

Proof-of-work is also designed to rely on previous blocks, thus enforcing the chronological order of the blockchain. This design makes it extremely difficult to undo past transactions because the proof-of-work for all subsequent blocks needs to be recalculated. When two blocks are found at the same time, the miner processes the first block received and then forwards the next block to the longest block chain once it is found. This ensures that the mining process maintains a global consistency based on processing power.

Bitcoin miners can neither cheat to increase their rewards nor process fraudulent transactions that disrupt the Bitcoin network because all Bitcoin nodes will reject blocks containing invalid data that violates the rules of the Bitcoin protocol. Therefore, even if not all Bitcoin miners can be trusted, the Bitcoin network is still secure.

Currently, mining pools dominated by the Chinese still have an advantage over miners in the United States and Europe. Not only do Chinese miners control the majority of computing power, but their electricity costs are generally lower as well.

On January 15, the difficulty of Bitcoin was raised by about 7%. The main reason is that the computing power of Bitcoin has increased significantly recently. This is the second time Bitcoin difficulty has been raised so far this month.
On January 2, Bitcoin mining difficulty was raised by 6.6%
. Starting from the second half of 2019, the increasing computing power has also caused the difficulty to continue to increase. With the exception of November 18, 2019 (Bitcoin’s difficulty was briefly lowered by 7.1%
), and most of the time Bitcoin difficulty is growing rapidly.

According to the calculation formula of Bitcoin output, the output will be halved almost every four years, eventually reaching the extreme value of 21 million. At this time, the value will rise significantly. This kind of currency without central bank control will continue to appreciate compared with the real currency that continues to be quantitatively easing. By 2013, more than 11 million Bitcoins had been produced.

In the beginning, Bitcoin could be mined using a CPU. Satoshi Nakamoto used his computer’s CPU to mine the world’s first genesis block. However, the era of CPU mining has long passed, and now Bitcoin mining is the era of ASIC mining and large-scale cluster mining.

Mining speed, technically called computing power, is the computer's ability to generate hash collisions per second. In other words, the number of hash collisions that the mining machine in our hands can do per second is the computing power. The macro principle of Bitcoin is just like gold. The total amount of gold on the earth is certain, and it is relatively rare. It can be used as a general equivalent. Before the large-scale issuance of paper money, it has been used as a form of currency. The same is true for Bitcoin. The reason why Bitcoin can be used as a currency for buying and selling is because its total amount is certain, and mining requires a lot of cost, mainly in terms of electricity consumption.

Proof of work, simply understood, is a certificate to confirm that you have done a certain amount of work. The entire process of monitoring work is usually extremely inefficient, and certifying the results of the work to prove that the corresponding amount of work has been completed is a very efficient way.

The above is what is the principle of Bitcoin mining? Related content introduction: In addition, once mining starts, you will be investing and hoarding coins every moment with the depreciation and electricity fees of the mining machine. The cycle is long, and one investment usually takes one to two years to mine, so you rely on mining to earn money. Bitcoin is only suitable for long-term investment. Short-term investment may not even be able to recover the capital.