At the heart of bitcoin mining is a math puzzle that miners are supposed to solve to earn bitcoin rewards. The puzzle is called proof of work (PoW), a reference to the computational work expended by miners to mine bitcoin. While it is often referred to as complex, in actual fact, the mining puzzle is fairly simple and can be described as guesswork.
The miners in Bitcoin’s network try to come up with a 64-digit hexadecimal number, called a hash, that is less than or equal to a target hash in SHA-256, Bitcoin’s PoW algorithm. A miner’s systems use considerable brute force in the form of multiple processing units stacked together and spit out hashes at different rates—megahashes per second (MH/s), gigahashes per second (GH/s), or terahashes per second (TH/s)—depending on the unit, guessing all possible 64-digit combinations until they arrive at a solution. The systems that guess a number less than or equal to the hash are rewarded with bitcoin.
Here’s an example to explain the process. Say I ask friends to guess a number between 1 and 100 that I have thought of and written down on a piece of paper. My friends don’t have to guess the exact number; they just have to be the first person to guess a number less than or equal to my number.
If I am thinking of the number 19 and a friend comes up with 21, they lose because 21 is greater than 19. But if someone guesses 16 and another friend guesses 18, then the latter wins because 18 is closer to 19 than 16. In very simple terms, the bitcoin mining math puzzle is the same situation described above, except with 64-digit hexadecimal numbers and thousands of computing systems.