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What is Bitcoin Mining - Bitcoin Mining Explained (in laymans terms)

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Published on Apr 12, 2013

One of the most confusing concepts within Bitcoin on the whole, is the process of mining. The explanations to "what is bitcoin mining" often given on the news and in the media, is that bitcoin mining is the solving of complex mathematical problems. While this is the way that bitcoin mining works, it is not the purpose of bitcoin mining.

The purpose of bitcoin mining is threefold
1. Bitcoin mining is the processing of transactions
2. Bitcoin mining is a fair way to distribute new bitcoin wealth
3. Bitcoin mining secures the bitcoin network.

As of today it costs approximately $1000 in electricity, and $1000 in hardware, to mine a single block for a reward of 25 bitcoins. It is estimated that within 12 months, these figures will increase 10 fold.

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