Mining

What miners actually do

A miner collects pending transactions, assembles a candidate block, and hashes it repeatedly with a changing value until the result falls below a target.

There is no shortcut. Finding a valid hash is brute force; checking one is instant. That asymmetry is the whole mechanism.

Difficulty adjustment

Bitcoin targets a block roughly every ten minutes. If more computing power joins, blocks arrive faster, so every 2,016 blocks the network raises the difficulty. If miners leave, it falls.

This is why block times stay steady whether the network runs on a few thousand machines or millions, and it is an elegant piece of design worth appreciating on its own terms.

Why it costs so much

The security argument is that rewriting history means redoing the work faster than everyone else combined. Making that expensive is the point, and the expense is electricity.

Proof-of-work bitcoin consumes power on the scale of a mid-sized country. Whether that is waste or the running cost of a neutral settlement system depends on what you think the system is worth. The more tractable question is where the electricity comes from: miners chase cheap power, which increasingly means stranded hydro, curtailed wind, and flared gas that would otherwise be burned for nothing.

Both the criticism and the defence contain real arguments. It is a genuine trade-off rather than a settled question, and it comes up at our meetups regularly.

Proof of stake

The alternative replaces electricity with capital at risk. Validators lock up funds and lose them for misbehaving, so attacking the chain costs money rather than power.

Ethereum switched in September 2022 and cut its energy use by over 99 percent. Bitcoin has not and, given how its participants think about changing the protocol, is unlikely to.

Centralisation

Mining has concentrated into large operations near cheap power and into pools that coordinate many machines. That sits awkwardly with the decentralisation the design was meant to deliver, and it is a fair criticism.

This page is general information, not investment advice.