Bitcoin mining involves people using computers or specialised mining hardware to participate in bitcoin’s blockchain network as a transaction processor and validator. Bitcoin uses a system known as proof-of-work (PoW) to validate transaction information.
Bitcoin sets itself apart from conventional currencies managed by central banks through its fixed supply mechanism. Specifically, there will only ever be 21 million bitcoins in existence, and at present, slightly fewer than 2 million are left to be mined. Roughly 90% of Bitcoin’s entire supply has already been mined, with an estimated 900 being mined per day. This limited availability is maintained through a process called “halving”, strategically crafted to control inflation and progressively enhance its value.
As of today, network participants verifying transactions receive a reward of 6.25 bitcoins for successfully mining each block. However, the policy ingrained into its mining algorithm dictates a reduction of roughly half every four years, resulting in the reward falling to 3.125 in the next cycle.
The first bitcoin halving occurred in November 2012 and experts predict that the next halving will occur in April 2024.
The reward for mining each block: