|My mining rig: 10-gigahash/sec, 0.001 BTC/day|
Bitcoin “mining” is the process in which new transactions are officially entered into the running ledger. Every 10 minutes, the current outstanding transactions are combined together in a “block”, then a "miner" calculates the SHA256 hash for the block.
The wrinkle here is that Bitcoin is decentralized, so no one person is responsible for calculating the hash. Miners must compete to create a hash. Therefore, the hash must have certain properties, namely, the first 64 bits of the hash must be zero (the current difficulty level is 63.8 bits, it changes over time to accommodate more mining power). A little bit of random data is added to the block before hashing, and the miner keeps changing that random data until the resulting hash has the proper number of leading zeros. Currently, that requires 18 quintillion calculations, or 18 billion billion, or 18,446,744,073,709,551,616 – or in technical terms, a boatload.