{"id":2810,"date":"2024-06-30T11:08:54","date_gmt":"2024-06-30T11:08:54","guid":{"rendered":"https:\/\/bitcoin-zukan.com\/?p=2810"},"modified":"2024-06-30T11:08:58","modified_gmt":"2024-06-30T11:08:58","slug":"mining","status":"publish","type":"post","link":"https:\/\/bitcoin-zukan.com\/en\/technology-en\/mining\/","title":{"rendered":"What is Bitcoin Mining? [Beginners]"},"content":{"rendered":"
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What is Bitcoin mining?<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n<\/div>\n\n\n\n

In Bitcoin, where there is no central administrator, the issuance of new Bitcoins is done by mining.<\/p>\n\n\n\n

The system of Bitcoin is based on the existence of miners all over the world who participate in the mining process.<\/p>\n\n\n\n

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In this article, I’ll explain in simple terms how bitcoin mining works.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n\t

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Supervisor: Kishin Kato<\/strong><\/p>\n\n\n\n

Has been researching Bitcoin since the end of 2016, and is responsible for explanations on media specializing in Bitcoin information, such as the “Bitcoin Institute<\/a>“.
CEO of Trustless Service Inc<\/a>\uff0fBitcoiner Hanseikai<\/a><\/p>\n<\/div>\n<\/div>\n<\/div><\/div>\n\n\n\n

This article was written in Japanese and converted to English using a translation tool.
Date of writing (Japanese version): December 2023<\/p>\n\n\n\n

What is Bitcoin Mining?<\/h2>\n\n\n
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I heard that Bitcoin has a system called “mining”\u2026<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n<\/div>\n\n\n\n

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To put mining in roughly speaking, it’s the process of checking the transactions that take place on the bitcoin network and writing them correctly into the blockchain.<\/p>\n\n\n\n

The people who participate in mining are called “miners” and are responsible for keeping the bitcoin network secure.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n\t

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Miners who perform mining use computers with high computing power to perform mining.
Repeating hash calculations while changing the nance in the block, the first miner to find a hash value below the target adds the block to the blockchain.<\/p>\n\n\n\n

*Nance: Number used only once
*Hash value: Irregular value obtained by hash calculation based on the created block<\/p>\n\n\n\n

The reward for this is bitcoins for newly generated bitcoins and transaction fees.
The reward system creates an incentive for miners to contribute to the bitcoin network and keeps the network secure.<\/p>\n\n\n\n

Mining Flow<\/span><\/p>

\n
    \n
  • Collection of transactions
    \u2192Collect unconfirmed transactions made on the network<\/li>\n\n\n\n
  • Verification of transactions
    \u2192Verify that the sender has sufficient bitcoin, that the same bitcoin has not been used before, etc.<\/li>\n\n\n\n
  • Formation of blocks
    \u2192Collect verified transactions as a block of data<\/li>\n\n\n\n
  • Adding blocks to the blockchain
    \u2192Continues to calculate large numbers of transactions until it finds a number that matches the criteria
    The first miner to find a value receives newly generated bitcoins and transaction fees.<\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n
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    How many times a day does mining take place?<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n<\/div>\n\n\n\n

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    New blocks are being created every 10 minutes.<\/p>\n\n\n\n

    That’s about 144 blocks per day.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n\t

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    How the Bitcoin Blockchain Works<\/h2>\n\n\n
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    I’d like to know a little more about how bitcoin mining works.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n<\/div>\n\n\n\n

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    Let me start by explaining the “hash function,” which is essential to understanding mining in depth, and how the blockchain works.<\/p>\n\n\n\n

    It’s a bit difficult to explain because of the technical terms involved, but I’ll try to explain it as concisely as possible.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n\t

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    Reference\uff1a\u30d3\u30c3\u30c8\u30b3\u30a4\u30f3\u306f\u3069\u306e\u3088\u3046\u306b\u3057\u3066\u52d5\u3044\u3066\u3044\u308b\u306e\u304b\uff1f(How does Bitcoin work?)
    (Written by Tetsuyuki Oishi)<\/p>\n\n\n\n

    Hash Functions<\/h3>\n\n\n
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    A hash function is a function that returns input data as an irregular string of a fixed length.<\/p>\n\n\n\n

    Hash Function<\/span><\/p>

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    • Returns an output (hash value) of a fixed length<\/li>\n\n\n\n
    • The same output comes out when the same input is put in. No matter who puts in the same input, you get the same output<\/li>\n\n\n\n
    • If you put in different inputs, you get different outputs. The same hash value cannot be obtained from different inputs.<\/li>\n\n\n\n
    • Based on the hash value, it is difficult to guess what was input (so difficult that it cannot be expressed at all at the level of trillions of parts per trillion or something like that)<\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n
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      It is astronomically impossible to get to the original input from the hash value of the mystery string! So it’s like.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n<\/div>\n\n\n\n

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      Next, let’s look at how Bitcoin uses the properties of the hash function to create a chain of data that cannot be tampered with.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n\t

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      The hash value mechanism prevents tampering.<\/h3>\n\n\n
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      To ensure that the blockchain can never be tampered with, a hash function is inserted in between to make the blocks intensely associated with each other.<\/p>\n\n\n\n

      Concept of Blockchain Mechanism<\/span><\/p>

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      • The transaction data of block 1 is put together and put into a hash function to obtain a hash value<\/li>\n\n\n\n
      • The hash value of the previous block 1 and the transaction information of block 2 are added together and put into a hash function to obtain a hash value.<\/li>\n\n\n\n
      • The hash value of the immediately preceding block 2 is added to the transaction information of block 3 and put into the hash function to obtain the hash value.<\/li>\n\n\n\n
      • Arranging the hash values<\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n
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        When you create a new block, you’re mixing in one previous hash value!<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n<\/div>\n\n\n\n

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        For example, even the slightest tampering with the transaction data in block 1 can change the hash value as if it were a different hash value.<\/p>\n\n\n\n

        This mechanism is surprisingly resistant to tampering.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n\t

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        But if you tamper with one and get caught, why not just tamper with everything after that?<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n<\/div>\n\n\n\n

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        The inventor, Satoshi Nakamoto, came up with an even more clever idea.<\/p>\n\n\n\n

        He made the calculation of the hash value even more difficult so that it would take a lot of computer power to tamper with it.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n\t

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        Making the calculation of hash values more painstaking (introduction of PoW)<\/h3>\n\n\n
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        PoW (Proof of Work) is a mechanism that makes the calculation of hash values even more arduous.<\/p>\n\n\n\n

        A parameter called nonce (nance) is added to the hash value calculation.
        There are approximately 4.3 billion possible nance values, and the process must be repeated through trial and error.<\/p>\n\n\n\n

        When a hash value with leading zeros is obtained, mining is successful.
        Every 10 minutes, miners from all over the world repeat the calculation to find the value, and only the first one to find the hash value is considered successful.<\/p>\n\n\n\n

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        The companies that participate in bitcoin mining have a huge array of high-powered computer equipment with huge prices and power costs.<\/p>\n\n\n\n

        It’s very impractical for someone with malicious intent to keep tampering with them.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n\t

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        By making the calculations so hard, you’re making sure the bitcoin database can’t be tampered with!<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n<\/div>\n\n\n\n

        How does bitcoin mining work?<\/h2>\n\n\n
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        How does bitcoin mining work?<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n<\/div>\n\n\n\n

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        From here, I’ll give you a quick rundown of the mining process.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n\t

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        Create a “Single Hash Value” Representing All Transaction Data<\/h3>\n\n\n
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        When a user sends bitcoins, the transaction (transaction data) is temporarily stored in a place called a “memory pool.”
        Miners select transaction data from the memory pool and combine hundreds to thousands of data entries into a single tree structure using a hash function.<\/p>\n\n\n\n

        The transaction fees paid by users are received by the miner who successfully mines the data.
        Miners prioritize transactions with high fees to maximize their rewards.<\/p>\n\n\n\n

        Mining Reward<\/span><\/p>

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        • Block Reward<\/strong>
          \u2192 Awarded to miners who successfully add new blocks. New bitcoins are issued and the reward decreases approximately every 4 years.<\/li>\n\n\n\n
        • Transaction Fees<\/strong>
          \u2192 A fee paid when users send bitcoins. All transaction fees included in a single block are paid to the miner who successfully mines the block.<\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n
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          So not only the block reward, but also the transaction fee included in the block is received by the miner!<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n<\/div>\n\n\n\n

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          The reason why paying a lot of transaction fees tends to get you approved faster is because the miner is prioritizing taking in the transactions with the highest commission fees.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n\t

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          Mining<\/h3>\n\n\n
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          The miner who does the mining just keeps changing the nance and repeating the calculation until a hash value with a large number of zeros is found.<\/p>\n\n\n\n

          Block generation<\/span><\/p>

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          • Searching for hash values while verifying unconfirmed transaction data & changing nance<\/li>\n\n\n\n
          • The first person to find a hash value that matches the criteria can create a new block with the transaction data<\/li>\n\n\n\n
          • Using the hash value found, block information including Nance and hash value is notified to other computers<\/li>\n<\/ul>\n\n\n\n

            The block can include a record of the transaction, sending bitcoins to the bitcoin address of the first miner found<\/p>\n<\/div><\/div>\n\n\n\n

            Computers that received the block information<\/span><\/p>

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            • Checks to see if the hash value is the one found, based on the information from the previous block and the new block<\/li>\n\n\n\n
            • Checks all transactions in the block for irregularities<\/li>\n\n\n\n
            • If there are no problems, the computer updates the end of the blockchain (database) it maintains with the new block<\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n
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              I was wondering how mining rewards are paid, but I’m surprised that the system includes transaction records for miners who successfully mine.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n<\/div>\n\n\n\n

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              If a successful miner adds some irregularity to the reward for himself, he won’t get the mining reward because it won’t be approved by the network.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n\t

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              What do you mean?<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n<\/div>\n\n\n\n

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              The newly created blocks will be verified by other nodes (miners and full nodes), so the fraud will be exposed.<\/p>\n\n\n\n

              Since other nodes will treat the fraudulent block as invalid, the block itself will not be accepted by the bitcoin network, and you will not receive any mining rewards that you would have otherwise received.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n\t

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              If you do something wrong, you’ll be found out!<\/p>\n\n\n\n

              I’m amazed that Bitcoin is structured so the network works without a central administrator.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n<\/div>\n\n\n\n

              Bitcoin Mining Block Rewards Scheduled to End Around 2140<\/h2>\n\n\n
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              I’ve heard that bitcoin mining will end in the future\u2026<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n<\/div>\n\n\n\n

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              The block rewards you get for mining will decrease in the future.<\/p>\n\n\n\n

              But mining itself will continue even after the block reward ends.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n\t

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              Bitcoin mining rewards decrease with each halving<\/h3>\n\n\n
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              Bitcoin mining rewards decrease with each halving.<\/p>\n\n\n\n

              Bitcoin has a system in place that halves the amount of bitcoin you receive for generating a block every “halving”
              The halving occurs approximately once every four years (every 210,000 blocks).<\/p>\n\n\n\n

              When bitcoin started in 2009, you got 50 BTC for mining a block.
              Since then, it has been halved, and as of 2024, you will receive 3.125 BTC as a reward.<\/p>\n\n\n\n

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              The halving will continue, and it’s said that by around 2140, mining rewards will be zero.<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n\t

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              Hmmm, if mining rewards are reduced to zero, will there be no reason for miners to mine?<\/p>\n<\/div><\/div>\r\n\t<\/div>\r\n<\/div>\n\n\n\n

              What Happens if the Mining New Issue Amount Goes to Zero?<\/h3>\n\n\n\n
              \n