Mining

Mining is how some blockchains add new transactions and create new coins at the same time. Despite the name, nothing is dug up. Computers compete to solve a hard mathematical puzzle, and the first to crack it earns the right to add the next block of transactions.

This system is called proof-of-work. The puzzle has no shortcut; the only way to win is to try huge numbers of guesses per second. That wasted effort is the point. Faking the history of a blockchain would mean redoing all that work faster than the rest of the network combined, which is why mining keeps the record honest.

The winner gets paid in two ways. They receive a block reward of freshly created coins, plus the transaction fees from the block. On Bitcoin, a new block is mined roughly every 10 minutes, and the block reward halves about every four years. That schedule controls how fast new bitcoin enters supply.

Early on, people mined Bitcoin on ordinary laptops. Not any more. Today it runs on specialised machines packed into warehouses, and the electricity bill is the main cost. Miners chase cheap power, which is why operations cluster wherever energy is going spare.

Not every cryptocurrency works this way. Ethereum dropped mining in 2022 and switched to proof-of-stake, where coins are locked up instead of hardware racing. Mining is one design, not the only one. You do not need to mine to own crypto: Banxa lets people buy it directly through an on-ramp in 100-plus countries.