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Bitcoin mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions. This ledger of past transactions is called the blockchain as it is made up of chained blocks of transactions. The blockchain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the blockchain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.

The mining process is performed by a group of users called “miners.” Mining is essentially a mathematical guessing game whereby miners guess at the cryptographic hash of the next block using a hash function. This hash function is the same function used to link all of the blocks in the blockchain.

When miners guess the correct hash, they are rewarded with a number of bitcoins. This is called the “block reward.”

Bitcoin Mining Hardware

While anyone can mine Bitcoin, the specialized hardware needed to do it profitably makes it unlikely that most people will do so. Mining hardware can be expensive and complicated to obtain.

Miners use their hardware to solve math problems and are issued bitcoin from the network in exchange for their work. This provides a smart way to issue the currency and also creates an incentive for more people to mine. When more mining power is used, the Bitcoin network becomes more secure.

Bitcoin mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block.

The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce new bitcoin into the system: Miners are paid any transaction fees as well as a “subsidy” of newly created coins. This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system.

Types of Miners

There are several different types of Bitcoin mining hardware available. Each successive generation is more efficient than the previous generation.

Bitcoin miners will always try to use the most efficient Bitcoin mining hardware available.

ASIC Bitcoin Mining

An Application Specific Integrated Circuit, or ASIC, is a microchip designed for a special application, such as mining. In the case of Bitcoin, miners use ASICs to mine. Because an ASIC is designed for a specific purpose, it can perform a hash function faster than a general-purpose computer can.

ASICs designed to mine Bitcoin can only mine Bitcoin and will only ever mine Bitcoin. The inflexibility of ASICs is offset by the fact that they offer a large increase in hashing power while reducing power consumption compared to all the previous technologies.

FPGA Bitcoin Mining

A Field Programmable Gate Array is a piece of hardware that can be programmed to do any kind of computation. FPGAs are typically used for specialized applications such as a complex image recognition or custom mining algorithms. In the case of Bitcoin, ASICs are generally used instead as they are far more efficient and cheaper to produce.

GPU Bitcoin Mining

A graphics processing unit (GPU) is a powerful processor which can be used to render images, animations, video, as well as perform other types of computation. GPUs are often used in gaming consoles and personal computers to accelerate the graphics rendering process for games, though they can also be utilized for non-graphical tasks such as mining.

Because of the massive increase in the Bitcoin hashrate since the inception of ASICs, GPUs are now obsolete for mining purposes.

CPU Bitcoin Mining

A CPU is an abbreviation for Central Processing Unit, which is the core component of computers. CPUs are designed for general purpose computing, and are quite capable of performing computations for Bitcoin mining. The problem with CPUs is that they aren’t very efficient at the Bitcoin hashing algorithm, so they use far more electricity than GPUs and ASICs and are generally far less effective.

As the popularity of Bitcoin has grown, miners quickly realized that graphics cards (GPU), and then ASICS were far better at mining than CPUs. CPUs were used to mine early Bitcoin blocks but are now obsolete for mining purposes.


Bitcoin mining is an important and integral part of the Bitcoin network that ensures fairness while keeping the Bitcoin network stable, safe and secure.