What is a Bitcoin mining algorithm?

Bitcoin mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions or blockchain. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place.

The Bitcoin mining algorithm is a computer program that runs the Bitcoin network and processes all of the new transactions. The algorithm uses a process called “proof-of-work” to confirm the legitimacy of the transactions. In order to be accepted by the network, a new block must contain a so-called proof-of-work. It is a piece of data which was difficult to produce so as to satisfy certain requirements. The proof-of-work requires miners (users) to solve computationally difficult puzzles in order to validate transaction blocks and create new blocks in the block chain. In return for this work, miners are rewarded with newly created bitcoins as well as transaction fees.