What Bitcoin Miners Actually Do Every 10 Minutes
Bitcoin miners are not solving complex math problems. They are guessing, and every guess costs electricity. That cost is the whole point.Cory Klippsten, CEO of Swan Bitcoin, walks through mining the way you would explain it to a friend, using the framework from Inventing Bitcoin by Swan co-founder Yan Pritzker.
Start with the problem, not the warehouses. Bitcoin is a ledger of who owns what with no bank in charge. Nodes around the world keep their own copies, and every ten minutes a new block of transactions is added. So who gets to write the next page? You cannot appoint permanent ledger keepers, because they can be bribed, threatened, arrested, or shut down. You cannot give every online identity one vote, because one person can create a million identities. Satoshi's answer was an open lottery: miners hash a summary of pending transactions over and over, changing a number called a nonce, hunting for a hash below a target. Yan compares it to rolling a die with roughly as many sides as there are atoms in the universe. Nobody is solving anything. Each hash is one lottery ticket, and electricity is the ticket price, which is exactly why a million fake identities buy you nothing.
Proof of work is hard for the players and easy for the validators. Every node checks the winning block almost instantly and for free: no coin spent twice, every transaction authorized, no more Bitcoin issued than the rules allow. An invalid block is rejected and the miner eats the cost of finding it. Miners propose, nodes enforce. The block subsidy started at 50 BTC in 2009, gets cut in half roughly every four years, and fell to 3.125 BTC after the 2024 halving. Every 2016 blocks, about two weeks, the difficulty adjusts so the network stays near one block every ten minutes with no administrator. Yan calls that adjustment possibly the key innovation of Bitcoin.
Swan has given away more than a quarter million copies of Inventing Bitcoin. Chapter 4 covers mining. Get a free copy at swan.com/freebook.
Chapters:
0:00 Opening
0:18 Where the framework comes from
0:59 The problem: a ledger with no bank
1:38 Satoshi's answer: an open lottery
2:12 A die with as many sides as atoms
2:35 Electricity is the ticket price
2:54 Hard to win, easy to verify
3:22 The reward and the halving
3:52 The difficulty adjustment
4:17 How to explain it to someone
What part of mining still trips people up when you explain it? Tell us in the comments. Receive SMS online on sms24.me
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