The term ‘mining’ is often used with natural resources like gold, silver, and other minerals. These resources are limited in supply and are therefore very valuable commodities, much like Bitcoin.
Similarly, ‘mining’ is the term used by Bitcoin founder, Satoshi Nakamoto, because miners will essentially be going deep into the Bitcoin network to mine those precious coins.
The Bitcoin mining process creates these 2 results: the first is it secures and verifies transactions that are happening on the Bitcoin network, and the second is it creates new bitcoins.
Bitcoin mining involves using the SHA-256 algorithm. SHA stands for Secure Hashing Algorithm which is a computational algorithm that is used for encryption.
Since Bitcoin is a decentralized type of currency, meaning no central body or authority gives permissions to miners, anyone with access to electricity and a mining machine can mine bitcoin.
However, these mining machines are themselves very costly as you need specialized computer chips to mine bitcoin efficiently, as those complex hash functions miners need to solve become more complicated over time.
In the early days, you could use your computer’s CPU (computer processing unit) and GPU (graphics processing unit) to solve hash problems, but today the problems are so complicated, miners are setting up expensive rigs and forming mining groups to pool their computer resources!
Individual miners are left with no choice but to join mining groups because their individual machines just cannot handle the difficult workload.
Bitcoin Mining And Mining Difficulty