What is Bitcoin Mining?

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

Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners 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. Bitcoin uses the hashcash proof-of-work function.

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 Bitcoins 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.

Bitcoin mining Methods

Home Mining

HARDWARE PRICING Per Device
SHIPPING / CUSTOM COSTS Depending on location
ELECTRICITY RATES Home use, usually not efficient
DELIVERY TIMES Can cost a lot of mining time
SYSTEM MAINTENANCE Depending on setup
ADDITIONAL EQUIPMENT Depending on setup
ELECTRICITY CONSUMPTION Depending on setup & scale
COST OF COOLING Depending on setup & scale
EXCESSIVE HEAT / LOUD NOISE Depending on setup & scale

Cloud Mining

HARDWARE PRICING Usually per MH/s
SHIPPING / CUSTOM COSTS None
ELECTRICITY RATES Usually low
DELIVERY TIMES Usually instant
SYSTEM MAINTENANCE None
ADDITIONAL EQUIPMENT Automatically solved
ELECTRICITY CONSUMPTION Automatically solved
COST OF COOLING None
EXCESSIVE HEAT / LOUD NOISE None