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I would like to design an application that involves integrating with the bitcoin mining process. My problem is that I don't have an environment that legitimately mines bitcoins because of hardware expenses. This makes it difficult for me to set up a solution around the bitcoin mining when I can't directly test my software with a newly mined block.

Is it possible to set up an alternate bitcoin network just on my LAN at home that would simulate the first beginnings of the actual bitcoin network (where mining a block is much easier)? Or is there a better to learn the exact specifics of what happens on a computer that successfully mines a block?

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Check this: https://en.bitcoin.it/wiki/Testnet

The testnet is an alternative Bitcoin block chain, to be used for testing. This allows application developers or bitcoin testers to experiment, without having to use real bitcoins or worrying about breaking the main bitcoin chain.

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