Every single bitcoin transaction that takes place has to be permanently committed to the Bitcoin blockchain ledger through a process called “mining.” Bitcoin mining refers to the process where miners compete using specialized computer equipment known as Application-Specific Integrated Circuit (ASIC) chips to unlock the next block in the chain. 


Unlocking blocks works as follow; 



  • Crypto mining uses a system called cryptographic hashing. This function simply takes any input (messages, words or data of any kind) and turns it into a fixed length alphanumeric code known as a “hash”.

  • Each input creates a completely unique hash and it’s nigh on impossible to predict what inputs will create certain hashes. Even changing one character of the input will result in a totally different fixed-length code.

  • Each new block has a value called a “target hash.” In order to win the right to fill the  next block, miners need to produce a hash that is lower than or equal to the numeric value of the ‘target’ hash. Since hashes are completely random, it’s just a matter of trial and error until one miner is successful.


This method of requiring miners to use machines and spend time and energy trying to achieve something is known as a Proof-of-Work system and is designed to deter malicious agents from spamming or disrupting the network.


Whoever successfully unlocks the next block is rewarded with a set amount of bitcoin known as “block rewards” and gets to add a number of transactions to the new block. They also earn any transaction fees attached to the transactions they add to the new block. A new block is discovered roughly once every ten minutes.


Bitcoin block rewards decrease over time. Every 210,000 blocks (or roughly four years), the number of bitcoins in each block reward is halved to gradually reduce the number of bitcoins entering the space over time. As of 2021, miners receive 6.25 bitcoins each time they mine a new block. The next bitcoin halving is expected to occur in 2024 and will see bitcoin block rewards drop to 3.125 bitcoins per block. As the supply of new bitcoin entering the market gets smaller it will make buying bitcoin more competitive – assuming demand for bitcoin remains high.