How are new bitcoins created

New Bitcoins are created through a process called "mining." Mining is a decentralized and secure way to add new transactions to the Bitcoin blockchain and release new Bitcoins into circulation.

Here's a step-by-step explanation of how new Bitcoins are created:

  1. Mining: Miners use powerful computers to solve complex mathematical problems, which helps to secure the Bitcoin network and verify transactions.
  2. Block creation: Miners group together a set of unconfirmed transactions into a block, which is a container that holds multiple transactions.
  3. Hash function: Miners use a cryptographic hash function to create a unique digital fingerprint, or "hash," for each block. This hash is used to verify the integrity of the block.
  4. Proof-of-work: Miners compete to find a hash that meets a certain criteria, known as the "target hash." This requires significant computational power and is known as "proof-of-work."
  5. Block reward: The miner who finds the correct hash gets to add the block to the blockchain and is rewarded with newly minted Bitcoins. The block reward is currently set at 6.25 BTC per block.
  6. Transaction verification: The miner also gets to verify the transactions in the block and add them to the blockchain.
  7. Blockchain update: The updated blockchain is then broadcast to the network, where it is verified by other nodes and added to their copy of the blockchain.
  8. New Bitcoins released: The miner's reward of newly minted Bitcoins is released into circulation, and the miner can use them to buy goods and services or hold onto them as an investment.

The total supply of Bitcoins is capped at 21 million, and the block reward is halved every 210,000 blocks, or approximately every four years. This means that the rate at which new Bitcoins are created will gradually decrease over time, making each Bitcoin more valuable.

Here's a rough estimate of the number of new Bitcoins that will be created each year:

Keep in mind that these numbers are subject to change, and the actual number of new Bitcoins created each year may vary depending on various factors, such as the rate of adoption and the overall health of the Bitcoin network.