Why Cryptocurrency Mining?
WHAT IS MINING?
Bitcoin mining is the process of validating the information in a blockchain block by generating a cryptographic solution that matches specific criteria. When a correct solution is reached, a reward in the form of bitcoin and fees for the work done is given to the miner who reached the solution first.
Over time, the reward for mining Bitcoin is reduced. This reward process continues until there are 21 million bitcoin circulating. Once that number is reached, the bitcoin reward will cease, and Bitcoin miners will be rewarded through fees paid for the work done.
Mining requires the mining program to generate a random hash and append another number to it called the nonce, or "number used once." When a miner begins, it always starts this number at zero. The nonce changes by one every attempt—first, it's 0, then 1, 2, 3, and so on. If the hash and nonce generated by the miner are more than the target hash set by the network, the attempt fails, and the miner tries again.
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Reasons for Mining?
The reward for successfully validating a block is bitcoin. In 2009, you'd receive 50 bitcoin for mining a block. But the block reward is halved every 210,000 blocks (or roughly every four years), so in 2013, the reward amount declined to 25, and in 2016, it became 12.5. In Bitcoin's most recent halving event, the reward was changed to 6.25
Another incentive for Bitcoin miners to participate in the process is transaction fees. In addition to rewards, miners also receive fees from any transactions contained in that block of transactions. When Bitcoin reaches its planned limit of 21 million (expected around 2140), miners will be rewarded with fees for processing transactions that network users will pay. These fees ensure that miners still have the incentive to mine and keep the network going. The idea is that competition for these fees will cause them to remain low after halving events are finished.