When a government needs more money, it can create more. Bitcoin does not work that way. New Bitcoin is not printed, it is found, through a process called mining, and the rules governing how much appears and how often were fixed in 2009 and have not moved since.
Mining is the least well named part of Bitcoin. Nobody is digging. What is actually happening is closer to a lottery that runs every ten minutes, where the only way to buy tickets is to spend electricity.
What miners are actually doing
Bitcoin keeps a public record of every transaction ever made, called the blockchain. Someone has to bundle up recent transactions, check they are valid, and add them to that record. Miners do this, and they compete for the right to do it.
The competition works like this. Each miner takes the block of transactions they want to add and runs it through a cryptographic function called SHA-256, which turns any input into a 64 character string of numbers and letters. Change one comma in the input and the output changes completely, in a way nobody can predict.
The network sets a target: the output has to start with a certain number of zeros. There is no clever way to work out which input produces such an output. The only method is to try, change one number, and try again. Miners do this billions of times a second.
Eventually one of them gets lucky. They announce the answer, every other computer on the network checks it in a fraction of a second, and the block is added. Then everyone starts again on the next one.
The process, step by step
Transactions gather. People send Bitcoin. Those transactions sit in a waiting area until a miner picks them up and checks that the sender actually has the funds and has not already spent them elsewhere.
A block is built. The miner bundles those transactions together with a reference to the block before it. That reference is what chains the blocks together and gives the blockchain its name.
The guessing begins. Miners hash the block over and over with a different number each time, hunting for an output below the target. This is the part that costs electricity.
Someone wins. The first miner to find a valid answer collects the block reward, currently 3.125 Bitcoin, plus the fees attached to every transaction in that block.
The chain grows. The new block is broadcast to the network and added to every copy of the ledger. To alter a transaction inside it, you would have to redo the work for that block and every block built on top of it, while the rest of the network keeps extending the honest chain faster than you can. This is why old transactions become effectively permanent.
The network adjusts the difficulty every 2,016 blocks, roughly a fortnight, so that blocks keep arriving about every ten minutes regardless of how many miners are competing. More miners means a harder target. Fewer miners means an easier one.
Why any of this matters
It stops double spending. Digital files are easy to copy. The problem Bitcoin had to solve was how to stop someone spending the same coin twice without a bank keeping score. Mining is the answer: a costly, public process for agreeing the order of events that nobody controls.
It issues new Bitcoin fairly. There was no pre-mine and no founder allocation. Every Bitcoin in existence entered circulation through this process, on a schedule everyone could read in advance.
It makes attacks expensive. Rewriting history requires out-computing the entire rest of the network. The electricity bill for that is the security budget.
Three things people get wrong
"Miners solve useful maths problems." They do not. The work is deliberately pointless. Its only purpose is to be provably expensive, so that honest participation is cheaper than cheating.
"I could mine on my laptop." You could, in 2010. Today mining is done by purpose-built machines called ASICs, which do one thing and do it hundreds of millions of times faster than a general purpose computer. A laptop would take longer than the age of the universe to find a block.
"The reward is the whole picture." Miners also collect transaction fees, and that share grows over time as the block reward shrinks.
The energy question
Mining uses a lot of electricity, and there is no honest way to write around that. The more interesting question is which electricity.
Miners are unusually flexible customers. They can be switched off in seconds, they do not care where they sit, and they will go wherever power is cheapest. That tends to mean energy nobody else wants: gas that would otherwise be flared, hydro in the wet season, and wind farms producing at times when the grid cannot absorb the output.
Britain has a live version of this problem. We pay wind farms to switch off when the grid cannot take their power, and those constraint payments run into hundreds of millions of pounds a year. We wrote about that in The Scottish Wind Farms That Get Paid to Switch Off.
What happens when the rewards run out
The block reward halves every 210,000 blocks, about every four years. It began at 50, and has fallen through 25, 12.5 and 6.25 to today's 3.125. The next halving is expected around April 2028, taking it to 1.5625.
Follow that far enough and the reward rounds to nothing, somewhere around the year 2140. Roughly 20 million of the 21 million total have already been mined, so the remaining million will trickle out over the next century.
After that, miners are paid entirely from transaction fees. Whether those fees will be enough to keep the network secure is a genuine open question, and one of the few things Bitcoin's supporters and critics argue about on the same terms.
Common questions
How long does it take to mine one Bitcoin? The wrong question, really. Blocks are found roughly every ten minutes and pay 3.125 Bitcoin, but no individual miner is owed anything. Most join pools and take a proportional share.
Can Bitcoin mining be stopped? Not easily. Countries have banned it, and the machines moved. When China banned mining in 2021, the global hashrate fell sharply and recovered within a year.
Is mining profitable? It depends almost entirely on the price of electricity and the price of Bitcoin, both of which move. It is an industrial business with thin margins, not a side hustle.
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