A Large Scale Mining Setup
A Home Hardware Setup
Bitcoin mining is a process that uses computer hardware to perform mathematical calculations. These calculations help verify the transactions which occur on the Bitcoin network, as well as add to the security of the network. The aim of bitcoin mining is to complete as many calculations as possible to initiate the formation of a new block on the blockchain. Rewards for achieving this are divided up among participants based on the amount of work contributed.
For new transactions to be confirmed, they need to be included in a block along with a mathematical proof of work. Such proofs are very hard to generate because there is no way to create them other than by trying billions of calculations per second, which requires ever-increasingly powerful computer hardware. This also requires miners to perform these calculations before their blocks are accepted by the network and before they are rewarded. As more people start to mine, the difficulty of finding valid blocks is automatically increased by the network to ensure that the average time to find a block remains equal to 10 minutes. As a result, mining is a very competitive business where no individual miner can control what is included in the block chain.