Bitcoin Mining Explained
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Bitcoin mining is the process in which blocks get validated and added to the blockchain.

What are Bitcoin Miners?

Bitcoin miners are really just specialized nodes running mining software. Their role is to enforce the rules of the Bitcoin protocol and to place transactions into groups called “blocks.” To create blocks, miners take transactions out of the mempool—the holding area for all pending transactions–and then decide which transactions they will include in the next block build and publish to the time chain or ledger. When creating blocks, miners often look at the transaction fee attached to a tx. The higher the transaction fee, the more likely the miner is to include the transaction in the next block.

How are Blocks Added to the Blockchain?

The next block is found when a miner finds the answer to a proof-of-work puzzle, or in other words, a complex math problem. Once a miner finds a valid solution (when the miner generates a hash that is less than the network's difficulty target), the miner broadcasts that he has already solved the puzzle to the other nodes supporting the network. The competing nodes validate whether the block is valid or not and if so they proceed to start attempting to solve the next puzzle. Nodes will build the new block on this version of the blockchain because it has the longest proof-of-work associated with it.

It is important to repeat that a block is only valid when the other nodes supporting the network agree that the miner who proposed the block has only included valid (truthful) transactions into the block and has found a valid solution to the proof-of-work puzzle. If these requirements are fulfilled, then the node that is validating the block broadcasts this information to the other nodes in the network so that they can update their copy of the blockchain to include the latest block that has been discovered.

What is a Block Reward?

The miner that successfully found the block that other nodes are adding to their copy of the blockchain receives a payment for their work called a “block reward.” The block reward is a diminishing subsidy designed to bootstrap the network until transaction fees are large enough to sustain the miners operational cost. Currently worth 6.25 BSV plus the total amount of transaction fees included in the block (which is why miners give transactions with larger transaction fees priority when they create blocks).

The block reward is distributed to the miner or mining pool (a group of miners working together to discover blocks) after 100 additional blocks have been found; this is so there can be a high degree of certainty regarding whether the block they added to the chain is actually valid, and leaves time for any potential oversights to be corrected.

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