How are New Bitcoins Created?
New Bitcoins are created through a process called "mining." This process involves miners utilizing powerful computers to solve complex mathematical problems. When a miner successfully solves a problem, they add a new block of transactions to the Bitcoin blockchain – a public ledger that records all Bitcoin transactions.
The first miner to find the solution is rewarded with newly created Bitcoins. This reward is known as the "block reward" and, as of October 2023, stands at 6.25 Bitcoins for each new block added. This reward is halved approximately every four years in an event known as the "halving." This mechanism regulates the supply of Bitcoin and ensures that the total supply will never exceed 21 million coins.
In addition to the block reward, miners also receive transaction fees from the transactions included in the block they mined. These fees serve as an incentive for miners to process and confirm transactions, contributing to the overall security and functionality of the Bitcoin network.
Overall, Bitcoin mining is a crucial aspect of the network, enabling the creation of new coins while maintaining the integrity and security of the blockchain.