What is Mining in Bitcoin Blockchain

You learnt about the various components of a block in the bitcoin blockchain network. Now, let’s go into the details of the mining process and see how a block is created in the network.

Mining Process Explained Again

The process of mining means that a new block is created and added to the blockchain. Every miner creates a block from the transaction existing in its transaction pool.

• For a block to be valid and added to the network, the miner needs to solve a puzzle, which is defined as below in the case of bitcoin blockchain.

          Hash of the block header < Value

          Hash of the header is the hash of all the data present in the header appended together.

• In case the above condition is not met, the miners need to recompute the hash.
• To recompute the hash nonce is used whose value is changed in every iteration to arrive at a new hash. This is because all the other data in the block such as time stamp, Merkel root, number of transactions etc. are all fixed and can not be changed.
• To change the hash the only thing that can be changed is the nonce value. The difficulty to attain the acceptable hash in the network is termed as the difficulty of the network. Once the condition is satisfied, the block becomes a valid block.
• The miner who calculated a valid hash first is allowed to claim the creation of the block

The scenario that you have seen so far is for a single miner in the network. However, in a real bitcoin network, there are millions of miners. Let’s find out how mining happens in the real network.

A miner competes with other miners in the network to form a block. The miner who is able to first generate a block in the network is given a block reward. The block reward started from 50 BTC and currently, a miner earns a block reward of 12.5 BTC for every block.

Once a block gets created it is propagated to the entire network and all the peers don’t add the block as such to their respective blockchains. Each peer node performs some validation on the incoming block. Let’s find out more about these validations in the next video.

The block header also contains a previous hash pointer of the block which precedes this block. Remember that blockchain is a chain of blocks that are connected by this previous hash pointer also known as the previous hash. The previous hash acts as a link between the blocks. Each node in the network checks whether the last block in its blockchain has the same hash as the previous hash pointer of the incoming block, it adds the block otherwise not.