What Is Bitcoin Mining?

Bitcoin mining is the process of validating the information in a blockchain block by generating a cryptographic solution that matches specific criteria. When a correct solution is reached, a reward in the form of bitcoin and fees for the work done is given to the miner(s) who reached the solution first.

Over time, the reward for mining Bitcoin is reduced. This reward process continues until there are 21 million bitcoin circulating. Once that number is reached, the bitcoin reward is expected to cease, and Bitcoin miners will be rewarded through fees paid for the work done.

Here's a simplified example to explain the process. Say you ask friends to guess a number between 1 and 100. Your friends don't have to guess the exact number; they just have to be the first to guess a number less than or equal to your number. If you think of the number 19 and a friend comes up with 21, another 55, and yet another 83, they lose because they all guessed more than 19. But if you have three friends left, and the next one guesses 16, they win, and the others don't get a chance to guess. The one who guessed 16 was the first to guess a number less than or equal to 19. In this case, the number you chose, 19, represents the target hash the Bitcoin network creates for a block, and the random guesses from your friends are the guesses from the miners.