# Bitcoin Production

A core component of the protocol is the production of Bitcoin as a result of the community driving the underlying mining power’s operation. The process for handling the Bitcoin produced is as follows:

* BTC production is credited by the mining pool to Prosper’s mining pool account as determined by the protocol’s live hashrate amount (after netting off mining pool platform’s standard fee)  
* Part of the net BTC produced will be liquidated to pay various service providers for hosting services, utilities costs, and other operating expenses
  * Prosper will be utilizing BTC price-hedging solutions provided by institutional trading partners to ensure stability and visibility of liquidation proceeds
* BTC production post-cost / fee is then deposited to a designated BTC wallet address\* held by the protocol with a credible 3rd party custodian
* The balance will then enter the protocol’s smart contracts\* which will then be split across the following two pools:
  1. [Protocol DAO’s treasury](https://docs.prosper-fi.com/protocol-mechanics/treasury-operation)
  2. Staking reward

{% hint style="info" %}
For the portion allocated for staking reward distribution, the staking contract handles all calculations and distributes rewards to PROS stakers based on the amount staked
{% endhint %}

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*\*After platform full launch, all of the protocol’s wallets and smart contract addresses will be available publicly for transparency and verification.*