Understanding Bitcoin – How is it mined?

Peter Le

By Peter H Le

Bitcoin is created through mining. Much like Gold, which is mined out from the physical ground, Bitcoin is mined from the digital ground. Whereas the Earth is the physical ground, the Internet is the digital ground.

It takes equipment and people to mine things out of the dirt. You need shovels, pick-axes, surveys, excavators and, most importantly, human energy to prospect for gold. Then you need trucks to deliver the mined gold ore to the refiners, who clean, purify, and shape the gold into jewelry or coins or bars for public use.

With Bitcoin, special computers are the shovels, and they basically search and dig the Bitcoin out of the digital ground. These computers are the mining equipment, which not only mines, but also refines and delivers the Bitcoin to the public. They are simultaneously the diggers, delivery trucks, and refiners for Bitcoin!

Gold miners repeatedly use the shovel to dig over and over again until they fine a gold nugget. They spend a lot of time and energy searching from place to place, digging and trying to find gold. As more gold gets removed from the earth, it takes more time and energy for each subsequent person searching for new gold. The more gold is removed out of the earth, the less of it will be available in the earth to dig out in the future.

Bitcoin miners behave very similarly. They are humans using computers to mine Bitcoin. This type of digital searching for digital gold involves running math problems over and over again, trying to find Bitcoin and dig it out of the Internet. The math problems are part of the design of the Bitcoin technology, and they create this virtual, or digital prospecting for Bitcoin.

Basically, all you need to know is that these math problems make the computer work harder and harder, as time goes by, to mine each Bitcoin. The more Bitcoin is extracted out of the Internet, the less will be there in that digital ground to be dug out in the future.

This deliberate scarcity makes Bitcoin similar to Gold, where the finite supply in the ground means the chances of finding gold steadily decreases as gold miners take it out of the earth. In a similar manner, any Bitcoin miner’s chance of getting a Bitcoin steadily decreases as more and more Bitcoin is dug out of the Internet.

In the great gold rush, prospecting only required a pick and shovel. However, as time went on, humans developed trucks and machinery to improve the efficiency and speed with which gold could be mined. At the same time, less and less gold was readily available, and eventually prospecting with a pick and shovel became virtually unfeasible.

Likewise, in its early days Bitcoin mining required only a personal computer with very modest hardware specs. As time went on, however, it got more difficult.

When gold got more difficult to mine, humans had to improve the process by creating bigger machines and better equipment. Mining Bitcoin now requires lots of powerful computers with better hardware specs, bigger facilities, and lots of power.

And it will continue to get even more difficult as time goes on. That is inherent in the technology’s design. More machines, more creativity, more human energy will be needed to dig Bitcoin out the Internet.


Peter Le is director of Qollage, a Singapore-based company specialising in consulting and concierge services for Ripple & Bitcoin technology. Born in Vietnam and raised in California, he consulted over 15 years in Business Development & Technology Services, working internationally from Hong Kong to Silicon Valley to Central America.

His core expertise is being the liaison between the worlds of Finance, Marketing, and Technology, creating real-world solutions for institutions. His past clients include industries in Banking, Health Care, Tourism, Gaming, Retail, and Telecommunications. He holds bachelors degrees in Marketing, Finance, and Management Information Systems at the University of Arizona, and is a member of the Platinum Group for international planning and structuring.

To contact Peter email us on [email protected]

Peter’s e-books “Bitcoin in English Part 1 and Part 2” are available free to all Premium Level Members of Q Wealth. To find out more about Premium Level Membership, click here:

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