What is Bitcoin Mining?
Bitcoin mining is the process that keeps the BTC network secure and running.
Bitcoin (BTC) miners collect pending transactions, bundle them into blocks and repeatedly perform hashing attempts (trial and error) until they generate a hash that meets the network’s difficulty target.
The first miner to find a valid solution broadcasts his block. Once the rest of the network verifies it, that miner earns a reward.
If another miner solves the block before you, your result becomes invalid, known as a “stale block”, and you must start over with a new set of transactions for the next block.
By 2025, after the April 2024 halving, the block reward is 3.125 BTC. Miners also earn transaction fees, which fluctuate depending on network congestion.
Competition is fierce and the barriers to entry are high. Almost all miners now use specialized application-specific integrated circuit (ASIC) machines, and most join mining pools to stabilize their income by sharing rewards with other participants.
Do you know? It is a common misconception that Bitcoin miners “solve complex cryptographic puzzles.” In fact, there is no puzzle to solve. Miners make trillions of guesses every second until one produces a hash that is less than the network’s difficulty target.
How to actually find a block
Here’s a step-by-step look at how blocks are mined on the Bitcoin network:
-
A miner creates a candidate block from transactions pending in the mempool.
-
They add a special “Coinbase Transaction” (not related to the Coinbase exchange), which creates new BTC and claims the transaction fee.
-
The miner repeatedly hashes the block’s header (via SHA-256) while adjusting the nonce (a number that is used only once).
-
The goal is to find a hash value lower than the current difficulty target of the network.
Once a valid block is found, the miner broadcasts it to the network. Other nodes independently verify its proof-of-work and transactions before adding them to their local copy of the blockchain.
If two miners find valid blocks at approximately the same time, the blockchain may briefly split into two versions. The network solves this when one branch deposits more proof-of-work (PoW) and becomes the main chain, while the other is left as a “stale” block.
This system ensures that Bitcoin consensus always follows the chain with the largest accumulated commit, keeping forks short-lived and the account flexible.
Mining rewards after 2024 halving
When Bitcoin’s fourth halving occurred in April 2024, the block reward dropped from 6.25 BTC to 3.125 BTC.
This is the fixed reward that every miner competes for. With approximately 144 blocks mined each day, the network issues approximately 450 new BTC per day, not including transaction fees.
fee wildcard
Transaction fees are what make miners’ earnings unpredictable.
Around the April 2024 halving, Bitcoin saw a surge in activity due to the launch of Runes, a new token protocol that flooded the mempool with transactions. For a short period, transaction fees actually exceeded the 3.125 BTC block reward. Some blocks paid miners tens of BTC in fees alone, a rare windfall compared to the general baseline.
However, these spikes were short-lived. By mid-2025, average fees had returned to normal levels due to reduced demand.
That pattern is familiar: Whenever the mempool overflows, whether from new protocols, hype cycles or major onchain events, users outcompete each other for space in Bitcoin’s limited 1MB-4MB block window. Once the backlog is cleared, the bidding war ends and fee revenues return to the baseline.
hashrate and difficulty
Mining power is measured in hashrate, the total computing power dedicated to securing the Bitcoin network.
Bitcoin keeps block times closer to 10 minutes by adjusting the mining difficulty every 2,016 blocks, or approximately every two weeks.
Here’s how the cycle works:
-
When the hashrate increases, blocks are mined faster than expected, increasing the difficulty of the next adjustment.
-
If the hashrate drops, blocks take longer to create, and the network reduces the difficulty to compensate.
For miners, more difficulty means earning less BTC for the same work. That’s why each difficulty retarget feels like an “earnings report”; It reset revenue expectations for the next two weeks.
In 2025, both hashrate and difficulty are at record highs. Newer, more efficient ASIC fleets keep coming online, pushing the difficulty upward and forcing older rigs out of the market.
Operators with high electricity costs are usually the first to close unless they can survive by obtaining cheaper energy or by taking advantage of sudden increases in prices and charges.
Bitcoin mining is still a constant race: only the most efficient setups survive as margins shrink.
Do you know? Bitcoin’s 10-minute block time was designed as a compromise: short enough for reasonably quick confirmation, yet long enough to minimize the risk of simultaneous block searches and chain splits.
Hardware and setup in 2025
Bitcoin mining is all about squeezing maximum efficiency from every watt of power. By 2025, the industry had evolved far beyond hobby rigs.
hardware miners use
At the core of almost every modern mining farm are ASICs, which are machines built specifically for Bitcoin. Their efficiency is measured in joules per terahash (J/TH), which represents how much energy is required to produce one unit of hashing power.
-
Air-Cooled Units: These remain the workhorses of the industry – models like Bitmain’s S21 (17.5 J/TH) and MicroBT’s M60S (18.5 J/TH) dominate larger farms. High-end versions like the Bitmain S21 XP increase the efficiency to around 13.5 J/TH.
-
Hydro and immersion rigs: These represent the state of the art, with models like the S21 XP Hyd rated near 12 J/TH. They provide top-tier performance but demand specialized liquid-cooling systems, adding cost and operational complexity.
cooling approach
Cooling has become a decisive factor in large-scale mining:
-
Air: Cheapest and easiest to deploy, but noisier and less power-dense.
-
Immersion: Immerses the rig in dielectric fluid, increasing uptime and overclocking potential; Farms like Riots Rockdale dedicate entire halls to this setup.
-
Hydro: Closed-loop water systems built into machines provide top efficiency but require large infrastructure investments.
fleet strategy
Mining economics can change from week to week, so operators optimize their fleets using both hardware choices and firmware tuning:
-
Low-power (underclocking): Reduces output but increases efficiency, ideal when Bitcoin’s hashprice (revenue per unit of computation) is weak.
-
Overclocking: Trade efficiency is used for higher throughput when the price of BTC or transaction fees increase.
The golden rule in 2025 is that efficiency matters more than raw power, unless you have access to extremely cheap, reliable power that justifies higher consumption.
Pools, Payments and HashPrice
Today almost all miners point their machines to a pool, which bundles hashrate from thousands of participants.
Pools stabilize earnings: Instead of waiting to individually “win” a block, miners receive stable payouts based on the share they contribute.
Some of the major pools like Foundry USA, Antpool, F2Pool, and ViaBTC dominate the network. It’s easy to track their activity on a live dashboard that shows which pools have mined the latest block.
How do pools pay?
-
Pay-Per-Share (PPS) and Full Pay-Per-Share (FPPS): Offer predictable payouts for each share submitted with FPPS, including transaction fee estimates.Pay-Per-Last-N-Share (PPLNS): Risky because rewards are earned only when the pool finds blocks – higher variance, but sometimes better returns.
The choice depends on whether you prefer stable cash flows (PPS/FPPS) or can tolerate volatility for potential upside (PPLNS).
Hashprice: miners’ key metric
Miners’ income is typically measured in terms of hashprice, USD earned per petahash of hashrate per day. The hashprice increases with the price of Bitcoin and transaction fees but declines as the network difficulty increases.
By October 2025, spot hashprice hovering nearby $51 per petahash per second per day. Break-even levels vary widely depending on machine efficiency and the cost of electricity, which is why miners with cheap or flexible electricity deals survive the downturn.
Do you know? Bitcoin miners hedge just like energy companies. By using tools like hashrate forward and fixed-payout contracts, they can lock in future revenue rather than ride the volatility of the hashprice.
Energy and Geography
Energy costs, local grid policies, and geography determine which miners will remain profitable and which miners will drop out.
How much energy does Bitcoin use?
It depends on who is doing the measurement.
In May 2025, Digiconomist estimated Bitcoin’s annual electricity consumption is approximately 190 terawatt-hours: equivalent to the annual electricity use of a medium-sized country like Poland or Thailand.
Some estimates, including data from the Cambridge Bitcoin Electricity Consumption Index, show Bitcoin’s share of global electricity use. Roughly speaking 0.8%.
In the United States, the government data It is suggested that crypto mining accounts for between 0.6% to 2.3% of national electricity demand.
Miners as flexible electricity users
It is also important to note that miners are flexible loads on the grid.
For example, in Texas, the Electric Reliability Council of Texas market pays miners to shut down power during peak demand.
Riot Platforms revealed that in August 2023, these were demand-response credits Worthy Equivalent to 1,136 BTC. Of course, disruptive power deals could overturn the economics of mining.
where are the machines
After China banned crypto mining in 2021, a large portion of the displaced capacity shifted to areas with abundant energy resources.
Texas became a focal point, while Canadian provinces with hydroelectric potential and natural gas also attracted significant deployment.
By 2025, public mining companies were operating an estimated 7.4 gigawatts of capacity across the US and Canada.
The decisive factors are straightforward: cheap and stable electricity, favorable regulatory conditions and grid programs that pay miners to act as flexible load during peak demand.
