Welcome to the world of Bitcoin and mining!

If you are reading this, chances are you want to understand how the most famous cryptocurrency works — and what process lies behind the creation of new coins and the operation of the network. This article will help you lay a solid foundation for your knowledge.

What is Bitcoin and the Blockchain

Bitcoin (BTC) is a digital currency that can be sent directly from one user to another without intermediaries like banks. The key feature of BTC is decentralization, meaning that the network isn’t controlled by any single organization or government.

Blockchain is the technology that powers BTC. Think of it as a public digital ledger that is distributed across thousands of computers around the world.
 

• All Bitcoin transactions are recorded in blocks.
• Each new block is cryptographically linked to the previous one, forming a chain of blocks (hence the name “blockchain”).
• Thanks to cryptography and decentralization, it is virtually impossible to alter or tamper with records in the blockchain after the fact, ensuring the network’s security and transparency.

Why mining is necessary and how Proof-of-Work works

If BTC is decentralised, then who confirms transactions and ensures that no one spends the same coins twice? This work is carried out by miners, which is known as mining.
 

Mining executes two key functions:

• Confirming transactions

Miners collect pending transactions into blocks and add them to the blockchain. This makes transactions official and irreversible.

• Issuance of New Bitcoins

Miners are rewarded for their work in creating a new block in the form of newly created BTC (as well as transaction fees). This is the only way for new BTC to appear in the system.

To add a new block, miners must solve a complex computational puzzle. This process is called Proof of Work. It requires significant computing power and energy consumption.

It is precisely this need to perform “work” that makes the BTC network secure: to attack the network and alter transactions, a malicious actor would need more computing power than the rest of the entire network combined — something that is incredibly expensive and virtually impossible.

Key terms: hashrate, network complexity, block reward.

To understand mining on a deeper level, it is important to know a few key terms:

Hashrate

It is the speed at which the mining hardware (ASIC miner) can perform calculations (hashes) to solve the Proof-of-Work issue.

It is measured in hashes per second: MH/s - megahashes, GH/s - gigahashes, TH/s - terahashes. For modern ASIC miners that work with BTC, it is TH/s - terahashes per second - that are relevant.

Please note: there is a nominal hash rate (as stated by the hardware manufacturer) and an effective hash rate (the actual speed you see in the mining pool statistics). The effective hashrate is often slightly lower than the nominal hash rate due to factors such as internet connection stability, network latency, and how the mining pool counts your work (accepted “shares”). This is a normal phenomenon that you should be aware of when working with a mining pool.

Network Difficulty

This is a measure of how difficult it is to find a valid Proof-of-Work solution and add a new block to the blockchain.

Difficulty is automatically adjusted by the Bitcoin network roughly every two weeks (every 2,016 blocks). The goal is to maintain an average block discovery time of about 10 minutes, regardless of how many miners are participating or what the total hashrate of the network is.

If the total network hashrate increases (more miners join), the difficulty goes up. If the hashrate decreases, the difficulty goes down. For an individual miner, a rise in difficulty means more computational work is required to find a block or to earn a share of the reward in a mining pool.

Block Reward

This is the reward given to the miner (or pool of miners) who successfully finds and adds a new block to the blockchain.

The award consists of two parts:
 

• Block Subsidy: A certain amount of new BTC is created “out of thin air” with each block. This amount is halved approximately every 4 years (the event is called halving). Initially, it was 50 BTC, as of April 2025 (after halving in 2024), it is 3,125 BTC.
• Transaction Fees: The sum of all the commissions that users have voluntarily attached to their transactions so that miners will include them in the block faster. As the subsidy decreases, the role of commissions in rewarding miners will increase.

Understanding these basics - Bitcoin, the blockchain, the role of mining, hashrate, difficulty, and block rewards - is a necessary foundation for anyone who wants to start mining. Now you are ready to move on and explore more practical aspects, such as choosing hardware and connecting to mining pools.

Support

In case of any questions related to the functionality of our exchange, you can:

• Leave a request on our website;
• Write to the support email: support@whitebit.com;
• Write to the chat using the button in the lower right corner of the screen (in the upper right corner of the WhiteBIT app, click ).