Bitcoin is more than just a buzzword—it represents a technological revolution in digital finance. In this deep dive, we uncover the intricate workings of Bitcoin, from mining and hashing to distributed ledgers and blockchain consensus mechanisms.

What is Bitcoin and Why Was It Created?

Bitcoin is a decentralized digital currency introduced in 2009 by the pseudonymous developer Satoshi Nakamoto. It was created as an alternative to traditional fiat systems, aiming to offer peer-to-peer, trustless transactions without reliance on intermediaries like banks or governments.

What is Mining?

Mining is the process of validating transactions and adding them to the Bitcoin blockchain. Miners use specialized hardware to solve complex mathematical puzzles based on a cryptographic hash function. The first miner to solve the puzzle gets to append the new block to the blockchain and receives a reward in Bitcoin.

What is a Hash?

A hash is a fixed-length alphanumeric string generated from data using a cryptographic function—in Bitcoin’s case, SHA-256. Each block includes a hash of the previous block, creating an unbreakable chain of trust. The output of SHA-256 cannot be reverse-engineered, ensuring security and integrity.

Bitcoin Hash Example (PHP)

$data = "Bitcoin block data";
echo hash("sha256", $data);

What is Hashrate?

Hashrate is the measure of a miner’s computational power, typically expressed in terahashes per second (TH/s). As of 2025, Bitcoin’s network hashrate consistently exceeds 600 EH/s (Exahashes per second), meaning the network collectively performs over 600 quintillion (6 × 10²⁰) SHA-256 hash operations every second. This massive level of computation acts as a formidable security layer, making it virtually impossible for any single entity to overpower the network and execute a 51% attack. The most powerful mining hardware currently available, such as the Bitmain Antminer S21 Hydro, achieves a hashrate of up to 335 TH/s while maintaining high energy efficiency around 16 J/TH. Despite their immense power, even top-tier miners contribute just a fraction to the overall network hashrate, illustrating the vast scale and decentralized nature of Bitcoin mining. Additionally, geographic distribution of mining operations—spanning North America, Central Asia, and parts of Northern Europe—further strengthens network resilience and reduces the risk of centralized control.

What is a Distributed Ledger?

A distributed ledger is a synchronized database maintained across multiple nodes, where every participant holds a copy. This decentralized model removes single points of failure and enables trustless consensus through protocols like Proof of Work (PoW).

Why Bitcoin is Secure

• Immutability: Once data is written to the blockchain, it can’t be altered without re-mining every subsequent block, which is computationally infeasible.
• Decentralization: No central authority controls Bitcoin. Thousands of nodes validate transactions globally.
• Consensus Protocol: Bitcoin uses Proof of Work, where consensus is achieved based on computational effort, deterring malicious actors.

Bitcoin Block Structure

Every Bitcoin block includes:

• Block header (version, timestamp, previous block hash, Merkle root)
• Nonce (used for mining)
• Transaction data

The Merkle root ensures all transactions in the block are valid and tamper-proof.

Energy Use and Environmental Concerns

Bitcoin’s Proof of Work consumes a large amount of energy, leading to debates about its sustainability. However, many mining farms are now turning to renewable energy sources to reduce carbon impact.

Code: Simulating a Proof of Work in PHP

$difficulty = 4;
$prefix = str_repeat("0", $difficulty);
$nonce = 0;

do {
    $hash = hash("sha256", "data" . $nonce);
    
    if (substr($hash, 0, $difficulty) === $prefix) {
        echo "✅ Valid hash found: $hash (Nonce: $nonce)\n";
    } else {
        echo "❌ Failed: $hash (Nonce: $nonce)\n";
    }

    $nonce++;
} while (substr($hash, 0, $difficulty) !== $prefix);

Code: Simulating a Proof of Work in Python

import hashlib

difficulty = 4
prefix = "0" * difficulty
nonce = 0

while True:
    data = f"data{nonce}".encode()
    hash_result = hashlib.sha256(data).hexdigest()

    if hash_result.startswith(prefix):
        print(f"✅ Valid hash found: {hash_result} (Nonce: {nonce})")
        break
    else:
        print(f"❌ Failed: {hash_result} (Nonce: {nonce})")

    nonce += 1

Conclusion

Bitcoin isn’t just digital money—it’s a technological breakthrough. Through distributed consensus, immutable ledgers, and cryptographic security, Bitcoin redefines how we store and transfer value. While it’s not without challenges, its architecture has proven resilient and transformative. At Larissa InfoTech, we believe in educating and building secure systems inspired by such robust technologies.

Illustration credit: Image by starline on Freepik ↗