What Is Mining?
Cryptocurrency mining is the process of using specialized computer hardware to validate transactions and secure a proof-of-work blockchain. Miners compete to solve cryptographic puzzles, and the winner earns the right to add the next block to the chain along with a block reward of newly created coins.
How Mining Works
Miners run specialized hardware (ASICs for Bitcoin, GPUs for some altcoins) that generates trillions of hash guesses per second. The first miner to find a valid hash that meets the network difficulty target wins the block reward. For Bitcoin, this reward is currently 3.125 BTC per block after the April 2024 halving.
Why It Matters for Traders
Mining economics create a production cost floor for Bitcoin. When BTC price falls below the average cost of mining, unprofitable miners shut down, hash rate drops, and selling pressure from miners decreases — historically forming a price floor.