Certified Bitcoin Professional Practice Exam

Which of the following statements about Bitcoin mining is true?

1. Bitcoin mining provides guaranteed returns

2. New bitcoins are added every time a block is mined

3. Bitcoin mining requires no hardware

4. Mining reduces the total supply of bitcoins

The correct answer is: New bitcoins are added every time a block is mined

The assertion that new bitcoins are added every time a block is mined is accurate. In the Bitcoin network, mining involves solving complex mathematical problems to validate transactions and add them to the blockchain. When a miner successfully solves a block, they are rewarded with a specific number of newly created bitcoins as well as transaction fees from the transactions included in that block. This process is central to how bitcoins are generated, with the reward decreasing approximately every four years in an event known as halving. This understanding is crucial in recognizing the nature of the Bitcoin supply mechanism, which is capped at 21 million bitcoins. The gradual release of new bitcoins through mining is designed to control inflation and simulate the scarcity found in precious metals like gold. Other statements related to Bitcoin mining misrepresent fundamental principles of the system, emphasizing the unique aspects of how new bitcoins are introduced into circulation through the mining process.