How Bitcoin mining works: proof of work, blocks, and rewards

Bitcoin has no central bank, no company running its ledger, and no one who approves payments. What it has instead is a global race, held roughly every ten minutes, to add the next page to the ledger.

That race is called mining. Here’s what miners actually do, how a block is built, what proof of work means in plain terms, how miners are paid, and who checks their work. This article covers the rules of the protocol, not whether mining is profitable, which depends on costs and prices that change constantly.

What Bitcoin mining is for

Mining does two jobs. The first is keeping the order of transactions agreed without a trusted third party. The Bitcoin white paper describes a peer-to-peer distributed timestamp server that produces computational proof of the order in which transactions happened, and that is what prevents the same coins from being spent twice. The second job is issuing new coins, because the miner who adds a block is rewarded with newly created bitcoin.

From transactions to blocks

Miners gather pending transactions and group them into a block. Each block contains the hash of the block before it, which links the blocks into a chain. According to the white paper, the work to change an old block would include redoing all the blocks after it, which is why history becomes harder to alter the further back it goes.

The first transaction in every block is a special one called the coinbase transaction, which pays the miner. Bitcoin.org’s developer reference explains that it collects the transaction fees from the block and, where allowed, the newly created subsidy.

Proof of work in plain terms

Proof of work is the puzzle miners solve. As the white paper puts it, the network implements it by incrementing a nonce in the block until the block’s hash has the required number of leading zero bits. In practice, a miner changes a number in the block, calculates its hash, checks whether the result is below a target value, and repeats until one works. According to the developer reference, if every possible value of the nonce has been tried, the miner changes other parts of the block, such as the timestamp or coinbase, and keeps going.

The puzzle is hard to solve but easy to check. Finding a valid answer takes enormous numbers of attempts, while anyone can verify it with a single calculation. The white paper calls proof of work “essentially one-CPU-one-vote,” meaning influence comes from computing effort, not from the number of identities. To keep blocks arriving at a steady pace, the target is adjusted about every two weeks, or every 2,016 blocks, so that the network averages roughly one block every ten minutes.

How miners are paid

A miner who finds a valid block earns the block reward, which Bitcoin.org’s developer reference defines as the block subsidy plus the transaction fees in that block. The subsidy started at 50 bitcoins and is halved every 210,000 blocks, roughly every four years. It was most recently halved in April 2024 to 3.125 bitcoins per block, and Bitcoin.org notes that it will reach zero around the year 2140, when all bitcoins will have been issued.

As the subsidy shrinks, fees are expected to make up a growing share of what miners earn. The white paper anticipated this, noting that once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees. It also describes mining as spending CPU time and electricity, which is why miners need to be paid. Many miners join groups called mining pools to share rewards, which is a topic of its own.

Who checks the miners

Miners don’t make the rules, they follow them. Other nodes on the network check each new block before accepting it, including its proof of work and its transactions, and a block that breaks the rules is rejected. For example, the developer reference says a coinbase transaction is invalid if it tries to spend more value than the block reward allows.

This is also why transactions are said to become more final as blocks are added. The white paper’s conclusion is that a public history quickly becomes computationally impractical for an attacker to change if honest nodes control a majority of the computing power.

WEEX Reminder: be wary of guaranteed mining returns

WEEX reminds users that real mining depends on specialized hardware, electricity, competition, and a reward that is shared and changes over time, so no one can promise fixed returns. Ethereum’s security guidance warns about unsolicited offers to join a “mining pool” for large returns, and the FTC says only scammers guarantee profits. Never share a seed phrase or verification code with someone offering to “mine” for you. Nothing here is financial advice.

Conclusion

Bitcoin mining is the process that orders transactions into blocks and issues new coins. Miners compete to solve a proof-of-work puzzle, the winner adds the next block and earns the subsidy plus fees, and every node checks the result. The difficulty adjusts so that blocks arrive about every ten minutes, and the subsidy halves about every four years.

FAQ

1. What does a Bitcoin miner actually do?
A miner collects pending transactions into a block and competes to solve the proof-of-work puzzle. The one who succeeds adds the block to the chain and earns the block reward.

2. What is proof of work?
It’s a puzzle in which a miner changes a number in the block until the block’s hash is below a target value. It takes many attempts to find an answer, but anyone can verify it with one calculation.

3. How long does it take to mine a Bitcoin block?
The network is designed to find a block about every ten minutes on average, and the difficulty adjusts about every 2,016 blocks to keep that pace. Individual blocks can come sooner or later.

4. How do Bitcoin miners get paid?
The reward is a block subsidy of newly created bitcoin plus the transaction fees in the block. The subsidy halves every 210,000 blocks and has been 3.125 bitcoins per block since April 2024.

5. Can miners change Bitcoin’s rules or reverse transactions?
Not on their own. Nodes reject blocks that break the rules, and changing an old block would mean redoing its work and the work of every block after it.