Ysidro J Tineo
Ysidro J Tineo 2 minutes reading from Bitcoin

Bitcoin mining: How to create new bitcoins

Where do Bitcoins come from?




How are new bitcoins created?

Bitcoin has a finite money supply, but not all of its units are in circulation yet. The only way to create new coins is through a process called mining – which is the special mechanism used to add data to the blockchain.

How many bitcoins are there?

The protocol sets the maximum monetary mass of Bitcoin at twenty-one million coins. Until 2020, a little less than 90% of these have already been generated, but it will take about a hundred years to produce the rest. This is due to a series of

periodic events known as halvings, which gradually reduce the reward for mining.

How does Bitcoin mining work? Through mining, participants add blocks to the blockchain. To do so, they must devote computational power to solving cryptographic puzzles. As an incentive, a reward

is available for anyone who proposes a valid block.

Generating a block is expensive, but confirming its validity is very cheap. If someone tries to cheat using an invalid block, the network will immediately reject it, and the miner will not be able to recover the mining costs.

The reward – often called the block reward – is made up of two components: transaction-related fees, and the block subsidy. The block subsidy is the only source of new bitcoins. Each mined block adds a certain amount of coins to the total money supply

How long does it take to mine a block?

The protocol adjusts the mining difficulty so that it takes approximately ten minutes to find a new block. But the blocks are not always found just ten minutes after the previous one – the time spent simply fluctuates around this target.

This post is based on this twitter thread.


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