What is Bitcoin mining?
Bitcoin mining is the process that maintains the BTC network’s security and functionality.
Bitcoin (BTC) miners gather pending transactions, compile them into blocks, and continuously attempt hashing (trial and error) until a hash is produced that meets the network’s difficulty target.
The miner who first discovers a valid solution broadcasts their block. Once verified by the network, that miner receives a reward.
If another miner solves the block before you, your result becomes invalid, termed a “stale block,” and you must begin anew with a fresh set of transactions for the next block.
As of 2025, the block reward is 3.125 BTC, following the April 2024 halving. Miners also collect transaction fees, which vary based on network congestion.
Competition is intense, with high entry barriers. Almost all miners now utilize specialized Application-Specific Integrated Circuit (ASIC) machines, with many joining mining pools to ensure more stable income by sharing rewards with others.
Did you know? It’s a widespread misconception that Bitcoin miners “solve complex cryptographic puzzles.” In truth, there’s no puzzle to decode. Miners simply make trillions of guesses each second until one yields a hash below the network’s difficulty target.
How a block is actually found
Here’s a detailed overview of how a block is mined on the Bitcoin network:
A miner forms a candidate block from pending transactions in the mempool.
They include a specific “coinbase transaction” (not related to the Coinbase exchange), which both mints new BTC and claims transaction fees.
The miner repeatedly hashes the block’s header (using SHA-256) while adjusting the nonce (a number used only once).
The goal is to discover a hash value lower than the network’s current difficulty target.
Once a valid block is discovered, the miner broadcasts it to the network. Other nodes verify its proof-of-work and transactions independently before adding it to their local version of the blockchain.
If two miners find valid blocks nearly simultaneously, the blockchain can temporarily split into two versions. The network resolves this by allowing the branch with more proof-of-work (PoW) to become the main chain, while the other is discarded as a “stale” block.
This system ensures Bitcoin’s consensus consistently follows the chain with the most accumulated work, keeping forks brief and the ledger robust.
Mining rewards after the 2024 halving
When Bitcoin’s fourth halving occurred in April 2024, the block reward decreased from 6.25 BTC to 3.125 BTC.
This fixed reward is what every miner competes for. With approximately 144 blocks mined each day, the network generates about 450 new BTC daily, excluding transaction fees.
The fee wildcard
Transaction fees contribute to the unpredictability of miner earnings.
Around the April 2024 halving, Bitcoin experienced a flurry of activity prompted by the launch of Runes, a new token protocol that overwhelmed the mempool with transactions. During this period, transaction fees even surpassed the 3.125 BTC block reward. Some blocks yielded miners tens of BTC in fees alone, a rare boon compared to the usual earnings.
However, these spikes were short-lived. By mid-2025, median fees returned to regular levels as demand subsided.
This pattern is familiar: Whenever the mempool overflows, whether due to new protocols, hype cycles, or significant on-chain events, users compete for space in Bitcoin’s restricted 1 MB-4 MB block limits. Once the backlog is resolved, bidding wars cease, and fee revenue reverts to baseline.
Hashrate and difficulty
Mining power is evaluated in hashrate, the cumulative computing power dedicated to securing the Bitcoin network.
Bitcoin maintains block times at approximately 10 minutes by adjusting mining difficulty every 2,016 blocks, or roughly every two weeks.
Here’s how the cycle operates:
When the hashrate rises, blocks are mined quicker than intended, prompting the next adjustment to increase difficulty.
If the hashrate declines, blocks take longer to create, and the network reduces difficulty to compensate.
For miners, increased difficulty means earning fewer BTC for the same effort. Thus, each difficulty retarget resembles an “earnings report”; it resets revenue expectations for the following two weeks.
In 2025, both hashrate and difficulty reached unprecedented levels. New, more efficient ASIC fleets are continually added, escalating difficulty and phasing out older rigs.
Operators with high power costs are typically the first to cease operations unless they manage to survive by securing cheaper energy or capitalizing on abrupt price and fee surges.
Bitcoin mining remains an ongoing race: Only the most efficient setups endure as margins tighten.
Did you know? Bitcoin’s 10-minute block time was designed as a compromise: short enough for reasonably swift confirmations, yet long enough to reduce the risk of simultaneous block discoveries and chain splits.
Hardware and setups in 2025
Bitcoin mining focuses on maximizing efficiency from every watt of power. By 2025, the industry has advanced far beyond hobby rigs.
The hardware miners use
At the heart of nearly every modern mining farm are ASICs, machines specifically built for Bitcoin. Their efficiency is assessed in joules per terahash (J/TH), indicating the energy required to generate one unit of hashing power.
Air-cooled units: These continue to be the backbone of the industry — models such as Bitmain’s S21 (17.5 J/TH) and MicroBT’s M60S (18.5 J/TH) dominate large farms. Premium versions like the Bitmain S21 XP boost efficiency further to around 13.5 J/TH.
Hydro and immersion rigs: These epitomize the cutting edge, with models like the S21 XP Hyd rated close to 12 J/TH. They provide top performance but require specialized liquid-cooling systems, increasing costs and operational complexity.
Cooling approaches
Cooling has emerged as a critical factor in large-scale mining:
Air: The most economical and simplest to implement, yet noisy and less power-dense.
Immersion: Submerging rigs in dielectric fluid enhances uptime and overclocking potential; farms like Riot’s Rockdale fully dedicate entire halls to this setup.
Hydro: Closed-loop water systems integrated within the machines provide optimal efficiency but necessitate substantial infrastructure investment.
Fleet strategy
Mining economics can fluctuate weekly, prompting operators to adapt their fleets through both hardware choices and firmware tuning:
Low-power (underclocking): Reduces output but enhances efficiency, perfect when Bitcoin’s hashprice (revenue per unit of compute) is low.
Overclocking: Sacrifices efficiency for higher throughput, utilized when BTC’s price or transaction fees surge.
The main guideline in 2025 is that efficiency takes precedence over sheer power, unless ultra-cheap, reliable electricity justifies higher consumption.
Pools, payouts and hashprice
Nearly all miners currently direct their machines to pools, which aggregate hashrate from thousands of participants.
Pools provide a stable income: Rather than waiting for a personal “win” of a block, miners receive consistent payouts based on their contributed share.
A few major pools, such as Foundry USA, AntPool, F2Pool, and ViaBTC, dominate the network. Their activities are easily tracked on live dashboards that display which pool mined the latest block.
How pools pay
Pay-per-share (PPS) and full pay-per-share (FPPS): Guarantee predictable payouts for every share submitted, with FPPS including an estimate of transaction fees.
Pay-per-last-N-shares (PPLNS): Riskier as rewards only materialize when the pool finds blocks — greater variance, but potential for better returns.
The choice hinges on whether you prefer steady cash flow (PPS/FPPS) or can bear volatility for potential higher rewards (PPLNS).
Hashprice: The miner’s key metric
Miner income is generally gauged as hashprice, the USD earned per petahash of hashrate per day. Hashprice rises with Bitcoin’s price and transaction fees but decreases as network difficulty escalates.
As of October 2025, the spot hashprice hovered around $51 per petahash per second per day. Break-even levels differ widely based on machine efficiency and electricity costs, explaining why miners with economical or flexible power agreements tend to endure during downturns.
Did you know? Bitcoin miners hedge similarly to energy firms. By employing instruments like hashrate forwards and fixed-payout contracts, they secure future revenue instead of riding the volatility of hashprice.
Energy and geography
Energy expenses, local grid regulations, and geographic factors determine which miners maintain profitability and which ones get pressured out.
How much energy does Bitcoin use?
It varies based on the source of measurement.
In May 2025, Digiconomist estimated Bitcoin’s annual electrical consumption at about 190 terawatt-hours: similar to the yearly power consumption of a mid-sized country like Poland or Thailand.
Some estimates, including data from the Cambridge Bitcoin Electricity Consumption Index, indicate Bitcoin’s share of global electricity use at approximately 0.8%.
In the United States, government data suggests crypto mining accounts for between 0.6% and 2.3% of national energy demand.
Miners as flexible power users
It’s also essential to understand that miners are flexible loads on the grid.
In Texas, for instance, the Electric Reliability Council of Texas market incentivizes miners to reduce power usage during peak demand.
Riot Platforms reported that in August 2023, these demand-response credits were valued at the equivalent of 1,136 BTC. Obviously, interruptible power agreements can drastically alter the economics of mining.
Where the machines are
Following China’s ban on crypto mining in 2021, a significant amount of displaced capacity relocated to areas abundant in energy resources.
Texas became a central hub, while Canadian provinces rich in hydroelectric power and natural gas also attracted notable deployments.
By 2025, public mining enterprises had reportedly been operating an estimated 7.4 gigawatts of capacity across the US and Canada.
The key factors are straightforward: affordable and stable energy, favorable regulatory conditions, and grid programs that incentivize miners to act as a flexible load by curtailing during high demand.
