Hodl had always known, in a vague sort of way, that Bitcoin was “mined.” He used the word regularly. He wore a ₿ on his collar. He had never actually thought about what mining meant.

Then his friend Satja invited him to visit a mining operation. It was in a warehouse on the edge of town. It was very loud. It was also one of the more interesting afternoons of Hodl’s life.

The warehouse was wall-to-wall with machines — each one about the size of a shoebox, stacked in rows on metal shelves, with fans spinning fast enough to create a constant roar. Hodl had to raise his voice to be heard.

"What are they doing?" he shouted.

"Solving puzzles," Satja shouted back.

Hodl blinked. "That's it?"

"Very, very hard puzzles. Every ten minutes, a new puzzle. The first machine in the entire Bitcoin network — anywhere in the world — to solve it gets to add the next block of transactions to the blockchain. And as a reward, they receive newly created Bitcoin."

Hodl stared at the machines. They hummed and whirred, utterly indifferent to his presence. "So that's where Bitcoin comes from."

"That's where Bitcoin comes from."

One of the machines at the end of the row flashed a row of lights. Satja smiled. "That one just solved it."

How Bitcoin mining actually works

Mining is the process that keeps the Bitcoin network secure and creates new coins. Here’s the plain-English version of what’s actually happening inside those machines:

Every transaction broadcast to the Bitcoin network gets collected by miners into a candidate block. To add that block to the blockchain, a miner must find a specific number — called a nonce — such that when combined with the block’s data and run through a mathematical function called SHA-256, the output starts with a certain number of zeros.

There is no shortcut. You can’t calculate the right answer — you have to guess. Billions of guesses per second, per machine. The first miner anywhere in the world to find the right answer broadcasts it to the network. Everyone checks it (which takes microseconds), agrees it’s valid, and the block is added. The winning miner receives the block reward: newly created Bitcoin, plus the transaction fees from every transaction in the block.

The puzzle adjusts itself every two weeks

As more miners join the network and total computing power grows, the puzzle automatically gets harder to keep the average block time at around ten minutes. If miners leave, it gets easier. This difficulty adjustment is one of Bitcoin’s most elegant design features — the network self-regulates to maintain a consistent issuance rate regardless of how much computing power is pointed at it.

The block reward halves every four years

When Bitcoin launched in 2009, miners received 50 Bitcoin per block. That reward halves approximately every four years — an event called the halving. As of 2024, the reward is 3.125 Bitcoin per block. Eventually, around the year 2140, the last fraction of a Bitcoin will be mined and no new coins will ever be created. Miners will then be compensated solely by transaction fees.

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Hodl’s observation: Mining is what makes Bitcoin trustworthy without any institution. Every transaction is validated by real computational work. Changing history would require redoing all that work, which is why a long-confirmed Bitcoin transaction is essentially irreversible. The proof of work is the proof of honesty.

Why does this matter for a merchant?

You don’t need to understand mining to accept Bitcoin payments. But it answers a question that many people have: who confirms my transaction?

The answer is: miners do. They’re incentivized by the block reward and transaction fees to keep the network running. The larger the global mining network, the more secure the blockchain — because rewriting history would require more computing power than the entire rest of the network combined.

When OrangeTill shows you a confirmed payment, what’s happened behind the scenes is that miners somewhere in the world have done real computational work to validate your transaction and add it to the permanent record. No institution. No bank. Just math, machines, and economic incentive.

The short version

Bitcoin mining is a global competition to solve a mathematical puzzle every ~10 minutes. The winner adds the next block of transactions to the blockchain and receives newly created Bitcoin as a reward. Mining is what makes Bitcoin secure and what controls how new Bitcoin enters circulation. The puzzle gets harder as more miners join, keeping the pace consistent. One day, all 21 million Bitcoin will have been mined. Until then, the machines hum.

Secured by proof of work. Accepted at your counter.

Every OrangeTill payment is confirmed by the same global mining network that has been running without interruption since 2009.

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