$BTC

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Imagine a worldwide computer network that processes payments and mints new currency at the same time. This is Bitcoin mining – the engine that powers the entire system.

Why "Mining"?
Like gold miners digging for precious metal, Bitcoin miners use computers to "dig" for new coins. But instead of shovels, they solve complex math puzzles. Here’s why:

  1. Verification: Miners confirm transactions (e.g., "Alice sends Bob 0.1 BTC").

  2. Security: Solving puzzles prevents fraud – altering a transaction would require re-mining all subsequent blocks.

  3. New Coins: Winners earn freshly minted Bitcoin (the block reward).

The Evolution of Mining Gear

  • 2009–2010: Laptops could mine thousands of Bitcoin. (Dan Morss, an early miner, ran rigs in his basement).

  • 2011: Gamers’ powerful graphics cards (GPUs) dominated.

  • 2013: Custom "ASIC" chips (designed only for mining) made home setups obsolete.

Real Example: Early miner Dan Morss ordered Avalon ASIC miners from China. By delivery time (2013), mining difficulty had spiked so much that his profit margins vanished – showing how fast this arms race moved.

How Mining Rewards Work

  • The first miner to solve the puzzle adds a "block" of transactions to the blockchain.

  • They earn two rewards:

    1. New Bitcoin (halved every 4 years; started at 50 BTC per block, now 3.125 BTC).

    2. Transaction fees from users.

  • Total supply is capped at 21 million (like limited edition collectibles).

Why Miners Matter
Miners keep Bitcoin decentralized. No single entity controls transactions – it’s like a global voting system where computers agree on valid payments.

The Home Miner’s Challenge
In 2013, a single ASIC miner cost ~$1,500 and guzzled power like a space heater. Dan’s wife complained about their "hot basement," but mining was a passion project:

"If Bitcoin fails, everything I have is worthless... but if it succeeds, it will have been worth it."

Key Shift: From Hobby to Industry
By 2014, mining industrialized:

  • Massive farms opened in places with cheap electricity (Iceland, China).

  • Home miners couldn’t compete, mirroring how individual gold prospectors gave way to mining corporations.

Why This Still Matters
Mining is Bitcoin’s backbone. It ensures:
✅ No counterfeiting (solved puzzles make fraud near-impossible).
✅ Predictable inflation (controlled new coin supply).
✅ Censorship-resistant payments (no government can freeze transactions).

Fun Fact: The "halving" (reward cut every 4 years) creates scarcity – like reducing new gold discoveries over time.