What is Bitcoin mining?

The process of minting new bitcoins is in some ways similar to the process of extracting precious metals from the earth. For this reason, it has come to be known as 'bitcoin mining.'

As stated in the Bitcoin white paper:

The steady addition of a constant amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended.

A simplified overview of bitcoin mining is as follows:

• People compete to earn bitcoin rewards by applying computing power in a process known as 'Proof-of-Work' (PoW). The process is named such because only participants (miners) who have proven they've dedicated sufficient resources (work) will have a chance at winning the rewards.
• Approximately every 10 minutes, rewards are distributed to a single winning 'miner.'
• Rewards are twofold -> (1) The 'block reward,' which is newly minted bitcoin. At the time of writing, the block reward is set at 6.25 bitcoins (but will be cut in half from early May 2024, then cut in half again four years later and so on). (2) The fees associated with all transactions in the current block. End users wishing to make a transaction must attach a fee to the proposed transaction as incentive for miners to include it in the next block.