I'm ill-informed and completely new to this so please forgive my impertinence.

From my very limited understanding of what Bitcoin mining involves my first impression is that it seems a colossal waste of energy.

My understanding is that a computer mines bitcoins by solving mathematical puzzles whose difficulty increases as time goes on. These puzzles are pointless in that they do not pertain to anything in the real world. Completing these puzzles does not achieve anything unlike something like Folding@Home or SETI.

Electricity is used to power computers to complete these puzzles. All of the overheads (energy, hardware, time, effort etc) are less than the price fetched by the resultant bitcoins so for some people it makes sense to devote their computer or server farm's time to mining them. This much is crystal clear.

It seems to me though that this is very strange exercise. Nothing real is being produced by the huge amount of electricity used to mine these bitcoins. Something virtual, certainly, but it seems odd that something virtual should have to have so much real tangible energy spent on it to imbue it with value.

I understand that there has to be some sort of labour process (machine rather than human in this case) for the Bitcoin to have any intrinsic value, but this does seem to be quite an energy inefficient way to go about it.

I think I have probably misunderstood something quite fundamental. I'm not trying to criticise this community but rather just understand exactly how this Bitcoin mining works and see what I've failed to understand.