As more and more people keep learning about Bitcoin, the word ‘mining’ keeps popping up. People might wonder what is meant by mining. Traditionally with resources like Gold, Silver, Coal and other precious metals we have to mine them or dig them from underground. However, with Bitcoin, mining has slightly different meaning.

The job of Bitcoin mining is not done by people, instead it’s done by computational power. Computers connected to the bitcoin network, dig/mine bitcoin by successfully solving complex mathematical problems to mine new bitcoins from the code.

Traditional resources like Gold or Silver exist underground but in Bitcoin Network, computers mine new bitcoins from the code of Bitcoin. Let’s learn more about Bitcoin Mining.

What is a Bitcoin Node

The software which is the driving force behind the bitcoin network is the Bitcoin Core also termed as Blockchain. The size of the entire blockchain of Bitcoin is close to 302.22 GB !! (updated as of 4th November 2020).

Bitcoin’s blockchain is a decentralised public ledger that stores the details of every single transaction conducted on the network by segregating them into blocks.

Along with Bitcoin Miners, the Bitcoin blockchain consists of nodes. Nodes or full nodes are best known because they have the latest version of Bitcoin Core software installed and the entire blockchain data downloaded on their computers.

Their job is to distribute these copies to more computers connected to this network and keep spreading more copies of this distributed ledger to help keep the network decentralised and distributed.

Apart from Full Nodes, the Bitcoin network also consists of Light Nodes. Light Nodes function minimally by storing only the information of previous blocks. They keep connecting with other Light Nodes to distribute this information and help this network in being decentralised. Light Nodes also consume less power since they need less computing power.

Credits : Datalight

Miners are considered as nodes as well as mining nodes. They perform a different set of functions as compared to other nodes.

While Full Nodes, keep storing the transaction records and keep distributing them on the decentralised bitcoin ledger, Miners keep verifying the transactions and put them in blocks. After the transactions are verified by the Miners, these are added to the blockchain by Full Nodes.

How is Bitcoin Mining Done?

Bitcoin mining is basically validating the transactions before they are added to the blockchain. This is where most of the computational power and effort goes. Let’s discuss more on Bitcoin Mining.

Once a Full Node detects and validates a transaction, they are sent to the Bitcoin Miners for verification before getting added to the blockchain.

In Bitcoin Mining, Proof of Work (PoW), is the original consensus algorithm in that blockchain network. Competition is an important aspect of Bitcoin Mining where miners compete with their other bitcoin mining peers to ‘work’ and compile transactions in a certain block.

Hashing or SHA-256 !

The ‘work’ involves solving a complex mathematical puzzle also known as ‘hash-function’ which requires a significantly high computational power. This happens in accordance to the Secure Hashing Algorithm (SHA) – 256 native to Bitcoin Network.

Solving hash function is also like solving a Bitcoin Block. Every hash function requires input data to be solved by the computers. Miners use the transaction inputs along with other few pieces of arbitrary information to combine them or arrive at a result beginning with a set of zeros. To learn more about hashes, you can watch this video.

Hash functions in the bitcoin blockchain takes around 10 minutes to get solved. The miner who does that first get’s the reward from the bitcoin network in form of new bitcoins. This algorithm is known as proof-of-work. The reward keeps decreasing with time and currently the amount is 6.25 Bitcoins.

Bitcoin Mining Difficulty !

Bitcoin Mining has an element of difficulty embedded in the process. This difficulty is the only reason why miners have to keep upgrading their mining rigs with time. With time we have seen people move from their laptops to gaming gpu and now dedicated bitcoin miners to stay in the game. The mining difficulty keeps on increasing as more miners join the network.

In today’s date, people like you and me can hardly make money by mining Bitcoin. The game has moved on to a different level.

But you know what we can do? We can buy bitcoin and keep holding them as an asset. The best and the most trusted place to buy Bitcoin in India is WazirX. You can check their website to buy Bitcoin, Ethereum, Ripple and more using instant INR deposits from your bank account.

Thanks for reading.


Educating people about Blockchain over Zoom and offline events. Writing blogs related to crypto and making videos explaining it.