What is Bitcoin mining?
Bitcoin mining is the process that keeps the BTC network secure and operational.
Bitcoin miners collect pending transactions, bundle them into blocks and repeatedly perform hashing attempts (trial and error) until they produce a hash that meets the network’s difficulty target.
The first miner to find a valid solution broadcasts their 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.
As of 2025, the block reward is 3.125 BTC, following the April 2024 halving. Miners also earn transaction fees, which fluctuate based on network congestion.
Nearly all miners now use specialized Application-Specific Integrated Circuit (ASIC) machines, and most join mining pools to stabilize income by sharing rewards with other participants.
Did you know? It’s a common misconception that Bitcoin miners “solve complex cryptographic puzzles.” In reality, miners simply make trillions of guesses per second until one produces a hash below the network’s difficulty target.
How a block is actually found
Here’s a step-by-step look at how a block is mined on the Bitcoin network:
- A miner builds a candidate block from pending transactions in the mempool.
- They add a special “coinbase transaction,” which mints new BTC and claims transaction fees.
- The miner repeatedly hashes the block header (SHA-256), adjusting the nonce.
- The goal is to find a hash value lower than the network's difficulty target.
Once a valid block is found, it’s broadcast to the network. Other nodes independently verify its proof-of-work and transactions before adding it to their copy of the blockchain.
If two miners find valid blocks at nearly the same time, the blockchain may briefly split. The chain with more accumulated proof-of-work becomes the main chain, while the other is discarded as a stale block.
Mining rewards after the 2024 halving
When Bitcoin’s fourth halving took place in April 2024, the block reward fell from 6.25 BTC to 3.125 BTC.
With around 144 blocks mined daily, the network issues roughly 450 BTC per day, excluding fees.
The fee wildcard
Transaction fees make mining revenue unpredictable.
Around the 2024 halving, the launch of the Runes protocol flooded the mempool, causing fees to temporarily exceed the 3.125 BTC block reward. Some blocks paid miners tens of BTC in fees alone.
By mid-2025, fees returned to baseline levels. These spikes typically occur when the mempool overflows with new protocols, hype or major on-chain events.
Hashrate and difficulty
Mining power is measured in hashrate, the total computing power securing the Bitcoin network.
Bitcoin maintains ~10-minute block times by adjusting difficulty every 2,016 blocks (approximately two weeks).
- When hashrate rises, blocks are mined faster → difficulty increases.
- When hashrate falls, blocks slow down → difficulty decreases.
In 2025, both hashrate and difficulty reached record highs, pushing older machines out of the market.
Did you know? Bitcoin’s 10-minute block time is a balance between quick confirmations and minimizing chain splits.
Hardware and setups in 2025
By 2025, Bitcoin mining had evolved far beyond hobby setups — efficiency per watt is everything.
The hardware miners use
- Air-cooled ASICs: S21 (17.5 J/TH), M60S (18.5 J/TH), S21 XP (13.5 J/TH)
- Hydro & immersion rigs: S21 XP Hyd (~12 J/TH) — highest efficiency but requires specialized cooling infrastructure.
Cooling approaches
- Air: Cheapest, easy to deploy, noisy.
- Immersion: Rigs submerged in dielectric fluid; higher uptime and overclocking potential.
- Hydro: Closed-loop water cooling; most efficient but expensive to deploy.
Fleet strategy
- Low-power mode: Higher efficiency, lower output — useful during low hashprice.
- Overclocking: Higher output, lower efficiency — used during price or fee spikes.
Pools, payouts and hashprice
Most miners use pools to stabilize earnings via shared rewards.
Major pools include Foundry USA, AntPool, F2Pool and ViaBTC.
How pools pay
- PPS / FPPS: Predictable payouts (FPPS includes estimated fees).
- PPLNS: Higher variance, potentially higher returns.
Hashprice
Hashprice measures USD earned per PH per day. It rises with BTC price and fees, and falls as difficulty increases.
As of Oct 2025: ~$51 per PH/s/day.
Did you know? Miners hedge using hashrate forwards and fixed-payout contracts to reduce volatility.
Energy and geography
Energy costs and local grid policies determine where mining thrives.
How much energy does Bitcoin use?
Digiconomist (May 2025): ~190 TWh annually (similar to Poland or Thailand).
Cambridge index: ~0.8% of global electricity.
US data: 0.6%–2.3% of national power demand.
Miners as flexible power users
In Texas, ERCOT pays miners to shut down during peak demand. Riot Platforms earned credits equal to 1,136 BTC in Aug 2023.
Where miners operate
Post-China ban, mining shifted to Texas, Canada and regions with cheap/abundant energy.
By 2025, public miners operated ~7.4 GW across the US and Canada.
