The objective of mining is to be the first miner who finds an output that the network accepts. Once the new block is validated, the winning node appends the block to the previous sequential block in the blockchain – on average every 10 minutes.
New transactions are broadcasted to the Mempool – waiting area.
The Bitcoin mining protocol is built upon a PoW algorithm. Thus, only parties that are willing to expend a physical amount of computational energy and time, can add transactions to the blockchain.
Miners are competing against one another to solve a mathematical puzzle, so that miners then have the right to complete transactions on the network. These puzzles are challenging to solve, however once finished, the solutions can be quickly validated by other miners.
Once a miner finds the solution for a new block, the miner broadcasts that block to the network. All other miners then verify the solution is correct. After, the confirmation of the block occurs.
The mining difficulty is algorithmically recalibrated as miners join or leave the network. Mining difficulty is measured in the hashes per second, in attempting to find the block. As miners increase by number, the complexities of crypto calculations increase with it.
Hash rates are the speed in which crypto puzzles are calculated. The adjustment in complexities is made in accordance with the total amount of computational power being used.
Miners are economically incentivised to keep a validated public history of the transactions, and thus continue to secure the blockchain. The broadcasting miner who successful updates the blockchain earns a block reward.
Rewards consist of newly minted Bitcoin, and fees attached to the transactions that have been inserted into the new Bitcoin block.
There are limited restrictions in block mining. Amount of profit for a miner is dependent upon how much hash power the miner has relative to the network.
Bitcoin protocol has a degrading static subsidy. Number of new Bitcoins produced per block diminishes by 50% every 210,000 blocks. The fixed subsidy was never meant to be the primary source of revenue supporting miners, but the transaction fees from each block minded.