Bitcoin Mining

Bitcoin Mining

The bitcoin system of trust is based on computation. Transactions are bundled into

blocks, which require an enormous amount of computation to prove, but only a small

amount of computation to verify as proven. The mining process serves two purposes

in bitcoin:

• Mining nodes validate all transactions by reference to bitcoin’s consensus rules.

Therefore, mining provides security for bitcoin transactions by rejecting invalid

or malformed transactions.

• Mining creates new bitcoin in each block, almost like a central bank printing new

money. The amount of bitcoin created per block is limited and diminishes with

time, following a fixed issuance schedule.