Bitcoin miners raked in more than $1 billion in combined earnings last month. Here's how they make money.

<p><img src="https://static2.businessinsider.com/image/602fc1cc7b571500189f63bd-2107/2021-02-10T112623Z_7_LYNXMPEH190BX_RTROPTP_4_CRYPTO-CURRENCY-COMPANIES.JPG" border="0" alt="2021 02 10T112623Z_7_LYNXMPEH190BX_RTROPTP_4_CRYPTO CURRENCY COMPANIES.JPG" data-mce-source="REUTERS/Colm Fulton"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><ul class="summary-list"><li>Bitcoin mining is the process that allows new coins to enter circulation, adding to the crypto ecosystem.</li><li>Miners receive bitcoin as a reward for verifying "blocks" of transactions on the blockchain.</li><li>Last month, they earned more than $1 billion in combined earnings. Here's how they do it.&nbsp;</li><li id="recirc"><a href="https://www.businessinsider.com/'hprecirc-bullet">Visit the Business section of Insider for more stories</a>.</li></ul><hr><p><a href="https://markets.businessinsider.com/currencies/btc-usd">Bitcoin</a> is created on a decentralized network called the blockchain, where a vast network of digital "miners" work to verify transactions at any given time.</p><p>These miners <a href="https://www.coindesk.com/bitcoin-mining-revenue-january-2021">earned a combined $1.1 billion</a> in January, up 62% from December, when bitcoin's price surged to $42,000. The road to making this amount of money is no easy feat.</p><p><strong>What do bitcoin miners do'</strong></p><p>Miners have the responsibility to audit transactions on the blockchain to ensure the legitimacy of the network. They also work to avoid the "double-spend" scenario, in which a bitcoin owner could sneakily spend the same coin twice through duplication or falsification.</p><p>Miners don't necessarily work as a team. They work to compete with each other in order to add the next "block," or a record of all bitcoin transactions, to the chain. A block contains a partial record of the most recent transactions and carries 1 MB (megabyte) worth of data.</p><p>The miner who receives a reward would be the first among a bunch to run through hordes of number combinations to solve a numeric problem, known as <a href="https://www.ledger.com/academy/blockchain/what-is-proof-of-work">proof of work</a>, to arrive at an acceptable 64-character code. The code of this winning block helps keep the blockchain secure. It would normally look something like the last line in this image:&nbsp;</p><p><img src="https://static2.businessinsider.com/image/602fcebf7b571500189f63ef-1116/Screenshot 2021-02-19 at 144343.png" border="0" alt="Screenshot 2021 02 19 at 14.43.43" data-mce-source="freecodecamp.org"></p><p>By being the first to solve the equation and successfully adding the next block to the chain, the miner is rewarded a certain amount of bitcoin. Only one such block can be added at a time, and each one takes about 10 minutes to verify and attach.</p><p>Over the course of the next 20 years, a total of <a href="https://thenextweb.com/hardfork/2019/07/08/heres-why-satoshi-nakamoto-set-bitcoin-supply-limit-to-21-million/">21 million coins</a> will be released.</p><p><strong>What are the rewards worth'</strong></p><p>In 2009, the first time bitcoin was created, miners were rewarded with 50 bitcoin per block. But according to a mandate by <a href="https://www.businessinsider.com/bitcoin-history-cryptocurrency-satoshi-nakamoto-2017-12">Satoshi Nakamoto</a>, rewards for mining are halved every four years. The rewards were cut to 25 bitcoin by 2012 and to 12.5 bitcoin by 2016.</p><p>As of February 2021, miners gain 6.25 bitcoin for every new block minedequal to about $330,475 based on current value. They're also allowed to keep the transaction fees from each trade carried out on that block, which is worth $20 per trade.</p><p>An <a href="https://blog.bitnovo.com/en/how-many-bitcoins-are-left-to-mine/#:~:text=How%20many%20bitcoin%20miners%20are,around%201%20million%20miners%20exist.">estimated 1 million</a> bitcoin miners are in operation, at present.</p><p><strong>SEE ALSO:&nbsp;<a href="https://markets.businessinsider.com/currencies/news/elon-musk-defends-tesla-bitcoin-bet-safer-than-dogecoin-binance-2021-2-1030100793" >Elon Musk defends Tesla's $1.5 billion bitcoin bet as 'adventurous enough' for a S&P 500 company - and says it's less dumb than holding cash</a></strong></p><p><a href="http://markets.businessinsider.com/news/bitcoin-miners-raked-in-more-than-1-billion-in-combined-earnings-last-month-here-s-how-they-make-money-1030103871#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/candy-corn-ingredients-made-of-gelatin-lac-resin-halloween-sugar-syrup-2017-10">What candy corn is actually made of</a></p>
Click here to read full news..