How Bitcoin mining works

What miners actually do

1. 1Collect pending transactions from the network and select those with good fees.
2. 2Assemble them into a candidate block, including a special first transaction that pays the miner's own address (the coinbase).
3. 3Compute the SHA-256 hash of the block header, changing a counter called the nonce each time.
4. 4Check whether the hash, read as a number, is below the network's current target.
5. 5If it is, broadcast the block. Other nodes check it quickly and add it to the chain.
6. 6If not, change the nonce (and other fields) and try again, trillions of times a second.

Why this is a lottery

A hash is unpredictable, so each guess has the same tiny chance of being below the target, whatever happened before. The more guesses per second you make, the more tickets you hold, and your chance per block is your share of all guesses made on the network. Because blocks are found by whoever is lucky first, a small miner can find a block as easily on its first hash as its billionth, and a large miner can go for weeks without one. See our complete guide to Bitcoin lottery mining and the odds calculator.

Difficulty and the ten-minute rhythm

The network wants one block about every ten minutes. Every 2,016 blocks, roughly two weeks, it compares how long those blocks actually took with the expected two weeks and adjusts the target. If blocks came too fast because more miners joined, the target gets harder. If they came too slowly, it gets easier. This keeps the rhythm steady whatever the total hashing power, which is currently around a zettahash per second.

Rewards

Hardware and pools

Early miners used ordinary computers. Competition drove the move to graphics cards and then to ASICs, chips built only to compute Bitcoin hashes, which are millions of times more efficient. Because the odds for a single machine are small, most miners join pools and share the rewards in proportion to their work. A few hobbyists mine alone as a lottery. Read about solo mining vs pool mining.

Common questions

• Does mining use a lot of energy? Yes. The network uses a large amount of electricity, which is what secures it. How to judge that is a matter of debate.
• Can I mine on my laptop or phone? Technically yes, practically no: the chance is effectively zero and the electricity cost exceeds anything you could earn.
• Is mining legal? In most countries yes, but some restrict or ban it. Check local law.

A tiny example of the hash puzzle

Imagine the puzzle is: find a number which, when added to the text "block data", gives a hash that starts with four zeros. You try 0, 1, 2 and so on. Each attempt gives an unpredictable-looking hash. On average you need about 65,000 attempts to get four leading zeros. Bitcoin's real target is vastly harder, requiring roughly 80 bits of zeros today, which is why trillions of attempts per second across the whole network are needed to find one every ten minutes. Your computer cannot shortcut it: the only way is to keep trying.

Key terms

• Nonce: the number miners change to get a different hash.
• Target: the number the hash must be below.
• Hashrate: how many guesses per second.
• Coinbase transaction: the block's first transaction, which pays the miner.
• Confirmation: a later block building on yours.