If you’re a beginner investor and want to know more about Bitcoin, you’ve come to the right place. This article is a simple explainer of how Bitcoin mining works, how new Bitcoins are introduced into circulation, and whether it’s profitable to mine Bitcoin.

Disclaimer: This information should not be interpreted as investment advice or an endorsement or recommendation for any particular security, product or service.

What Is Bitcoin Mining?

In technical terms, Bitcoin mining is the process of making computer hardware do mathematical calculations for the Bitcoin network to confirm transactions and increase security.

Mining has been designed to become more and more difficult as more Bitcoins are generated to ensure that the average new Bitcoin takes increasingly more work to develop.

This public ledger of past transactions is called the blockchain. It can explore any transaction made between any bitcoin addresses at any point on the network.

Bitcoin transactions are sent from and to electronic bitcoin wallets and are digitally signed for security. The miners use specialized software to solve math problems and are issued a certain number of bitcoins in exchange. This provides a smart way to issue the currency and creates an incentive for more people to mine.

How to Mine Bitcoin in 4 Steps

1. Acquire Your Bitcoin Mining Hardware

First, you’ll need to select a type of hardware for Bitcoin mining. Each type of hardware has different strengths and weaknesses. You can use a PC to do the calculations, but you’ll need an industrial-grade mining rig if you want to generate a significant amount of bitcoins. This is due to the increasing difficulty of the puzzles as more bitcoins are generated.

Miners use computers to solve complex math problems (the calculations get progressively more difficult as more bitcoins are generated to ensure that the average new bitcoin takes increasingly more work to generate). The answers to these problems are called hashes.

When one of the miners in the network successfully creates a hash, they are rewarded with a fixed number of newly-generated bitcoins. The block of transactions is then added to the blockchain, and the miners move on to the next set of transactions.

2. Download a Bitcoin Mining Software

Bitcoin mining software is actually just software that analyzes the blockchain and creates corresponding solutions. Mining software listens for broadcast trades on the peer-to-peer network and performs the appropriate tasks to process and confirm these trades.

Bitcoin miners perform this work because they can earn transaction fees paid by users for faster transaction processing, and newly created bitcoins are issued according to a fixed formula.

3. Join a Bitcoin Mining Pool

To generate any actual Bitcoins in Bitcoin mining, you will need to join a Bitcoin mining pool – a group of miners who combine their computing power and split the mined Bitcoin between participants. Mining pools provide participants with a better chance of earning Bitcoins as the rate of block creation increases with the number of miners in the pool.

The downside is that the mining pools have to pay for the continuous development of new mining hardware and can pass these expenses on to the miners in the form of lower fees.

4. Start Mining Bitcoins!

You’re now ready to mine bitcoins! Simply click Start Mining and enter your Bitcoin address.


Bitcoin mining seems easy and fun – but the truth is, it’s not a walk in the park. It takes a lot of trial and error and investment before you can start earning substantial bitcoins.

If you’re just getting started with Bitcoin mining, make sure you have a decent bitcoin mining rig to get reasonable mining results. On the other hand, if you’re a veteran miner, there are many options to expand your bitcoin mining operation.

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