17 Mar 2025

light mode

Bitcoin Mining: A Beginner’s Guide

Bitcoin Mining: A Beginner’s Guide

Breaking it down: What is mining and why do miners matter? Does Bitcoin mining harm the environment? What is a hash rate and why does it matter? How to mine Bitcoin in 2023?

On this page

Understanding mining starts with a basic grasp of blockchain.

Blockchain is a digital ledger recording transactions, maintained across a network of nodes, each holding a unique copy. Users of the blockchain can view past transactions and add new data to the network. To simplify processing, transactions are organized into blocks, which are then interlinked in a chain.

These blocks are secured with cryptography, ensuring their contents are unalterable. This feature establishes a decentralized transaction ledger, free from any central regulatory body.  

Blockchain Working Scheme. Source: authentrend

Blockchain Working Scheme. Source: authentrend

For an even more straightforward explanation, see our article “How to explain blockchain technology to your kid.

What is Bitcoin Mining and Who are Miners?

Mining is the process of verifying transactions between users and adding them to the blockchain's public ledger. Mining serves two main purposes:

  • It upholds the blockchain's emission policy by adding new coins to the existing circulating supply.
  • It ensures the blockchain's integrity, safeguarding it against external threats and unauthorized transactions.

To perform mining, participants deploy fully operational network nodes and engage in solving intricate cryptographic problems with their hardware. For their efforts, they are rewarded in the digital currency of the blockchain they are maintaining. These individuals are referred to as miners.

Essentially, mining is akin to safeguarding the borders of a Proof of Work (PoW) network against order disruptors, such as hackers. Notably, this role is often financially rewarding.

In our article “What is a Double Spend Attack?”, we delve into the tactics used by cybercriminals to breach the system.

What is a Hash Rate?

The hash rate in Bitcoin mining is the total computational power of the network at any given moment. It's the cumulative power of all the mining equipment in use. This key network metric quantitatively indicates the number of hashes that miners can generate every second to find the next block. The hash rate is measured in hashes per second (H/s), but due to modern computers' high computational capabilities, larger units like TH/s (terahashes per second) and PH/s (petahashes per second) are commonly used.

In terms of network security, a high hash rate plays a crucial role in preventing potential attacks. The higher the hash rate, the more challenging and costlier it becomes for hackers to gain control over 51% of the network's total power. Without achieving this threshold, manipulating transactions is not feasible. Therefore, the greater the number of miners participating in the blockchain, the more secure it becomes.

However, an increasing network hash rate also raises the difficulty level of mining a block. This is linked to the algorithms of certain blockchains, like Bitcoin, where the rate of new block creation is designed to remain constant. Thus, as the network's hash rate increases, it prompts an even higher hash rate until some miners are forced to exit the competition due to the high costs or inability to keep up. This leads to a subsequent fall in the hash rate and the mining difficulty.

The Current BTC Difficulty. Source: coinwarz

The Current BTC Difficulty. Source: coinwarz

For insights on the correlation between hash rate and mining profitability, refer to our article “Why hash rate matters”.

What Do You Need to Mine Cryptocurrency?

If you're thinking about mining cryptocurrencies and expect to easily mine Bitcoin, you might be in for a disappointment.

A decade ago, mining BTC was feasible with just a standard computer equipped with a mid-range graphics processor. The lower complexity level of cryptographic calculations at that time made a gaming graphics card sufficient. However, the scenario has drastically changed, and mining now requires specialized equipment, known as mining rigs or ASICs.

Moreover, while solo mining used to be possible, it has now become more of an exception. As a result, miners typically join mining pools. The advantage of being in a pool is evident: it combines the processing power of multiple miners, increasing the likelihood of earning block rewards, which are then shared among all team members.

Mining BTC has scaled up to an industrial level and is mostly feasible for large companies that can set up their own data centers. In addition to powerful hardware, these organizations also ensure access to cost-effective energy sources and efficient cooling systems for the equipment.

Cryptocurrency Mining Scheme. Source: navi.com

Cryptocurrency Mining Scheme. Source: navi.com

For more information on the risks associated with mining pools, refer to our article “Mining Pools: A New Avenue for Money Laundering?“.

Does mining cause environmental pollution?

Yes, it does.

Bitcoin mining contributes to around 60 million tons of carbon dioxide emissions each year. 

However, this is significantly lower than global emissions from vehicles or metallurgical industries. As such, CO2 emissions alone are not a strong enough reason to ban mining, as was the case with the New York State authorities.

The more critical issue is the high energy consumption of cryptocurrency mining. Verifying transactions on the Bitcoin blockchain annually requires seven times more electricity than all global operations of Google in the same period.

Around 160 TWh of electricity is used annually for mining BTC, surpassing the usage of countries like Argentina.

The crypto community, however, is aiming to change this status quo. Ethereum, for example, has shifted from a Proof-of-Work (PoW) algorithm to a Proof-of-Stake (PoS) model, significantly reducing its energy consumption. 

Additionally, there is a growing trend of miners using renewable energy sources, such as:

The problem, therefore, isn't the amount of energy consumed by mining but where this energy is sourced and how it's distributed. From this viewpoint, blockchain technology is offering new opportunities for a fundamental restructuring of global energy logistics.

A Solar-Powered Mining Farm in California. Source: Medium

A Solar-Powered Mining Farm in California. Source: Medium

For insights into whether Bitcoin mining could be entirely phased out, refer to our article “Can Bitcoin Switch to Proof-of-Stake?”.

The content on The Coinomist is for informational purposes only and should not be interpreted as financial advice. While we strive to provide accurate and up-to-date information, we do not guarantee the accuracy, completeness, or reliability of any content. Neither we accept liability for any errors or omissions in the information provided or for any financial losses incurred as a result of relying on this information. Actions based on this content are at your own risk. Always do your own research and consult a professional. See our Terms, Privacy Policy, and Disclaimers for more details.

Articles by this author
Pump․fun Meme Coin Launches Collapsed To 0.82%

Pump․fun Meme Coin Launches Collapsed To 0.82%

The Pump․fun platform has recorded an unprecedented drop in the weekly graduation rate of meme coins – for the first time, it fell below 1%, reaching 0.82%.

Anton Kryshtal
Senate Banking Committee Passes Stablecoin Bill: What the Genius Act Means 

Senate Banking Committee Passes Stablecoin Bill: What the Genius Act Means 

The Senate Banking Committee has endorsed the Senate Stablecoin Bill GENIUS (Guiding and Establishing National Innovation for U.S. Stablecoins), which seeks to set up a clear regulatory framework for payment of stablecoins.

Anahit Avetisyan
$100 Billion Gone! Bitcoin Speculators Trapped by the Market

$100 Billion Gone! Bitcoin Speculators Trapped by the Market

CryptoQuant reports that short-term Bitcoin investors lost over $100 billion while trying to cash in on BTC’s extreme volatility.

Anton Kryshtal
Crypto Scam Exposed: AML Bitcoin CEO Faces Conviction

Crypto Scam Exposed: AML Bitcoin CEO Faces Conviction

AML Bitcoin CEO Rowland Marcus Andrade was found guilty of wire fraud and money laundering by a federal jury in California after a five-week trial for misleading investors.

Anahit Avetisyan
How the Ethereum Foundation Is Shaping the Future of Crypto

How the Ethereum Foundation Is Shaping the Future of Crypto

For over a decade, the Ethereum Foundation has been the driving force behind Ethereum’s growth—from Vitalik Buterin’s white paper to a global financial and technological revolution.

Ivan Dikalenko
The Biggest Tweets in Crypto This Week: SEC vs Ripple Updates & More

The Biggest Tweets in Crypto This Week: SEC vs Ripple Updates & More

Summing up this week in Crypto Twitter/X: major announcements, updates, rumors, and interesting takes on the SEC vs Ripple case, Ethereum’s updates, the Trump family deal with Binance, and more.

Anahit Avetisyan
The Stablecoin Showdown: How USDC and Tether Compete for Dominance

The Stablecoin Showdown: How USDC and Tether Compete for Dominance

Two giants lead the stablecoin market—Tether (USDT) and USD Coin (USDC). But beneath their promise of stability lies a fierce competition.

Ivan Dikalenko
What Is Fiat Currency and Its Role in the Crypto World?

What Is Fiat Currency and Its Role in the Crypto World?

Discover fiat currency—a government-issued money without intrinsic value—and learn how it interacts with cryptocurrencies and influences digital financial systems worldwide.

The Coinomist
How to Short Crypto Safely and Effectively: Tips and Strategies

How to Short Crypto Safely and Effectively: Tips and Strategies

Learn advanced strategies for shorting crypto safely. This guide covers key tips, risk management techniques, and various methods like direct shorting, futures, margin trading, and options.

The Coinomist
Risk Reversal: A Deep Dive into Best Practices

Risk Reversal: A Deep Dive into Best Practices

Explore risk reversal strategies and learn best practices for managing risks in trading and business. Understand how to balance risk and reward to optimize outcomes.

The Coinomist
World Bridge Currency: Is XRP the Future of World Bridge Currencies?

World Bridge Currency: Is XRP the Future of World Bridge Currencies?

Explore XRP as a potential world bridge currency. Learn how its speed, low fees, and scalability could transform global cross-border transactions and reshape financial systems.

The Coinomist
What Is TRC20? Exploring the Tron Network Standard

What Is TRC20? Exploring the Tron Network Standard

Discover TRC20, the token standard on the TRON blockchain. Learn how TRC20 tokens work, their advantages like low fees and speed, and their use cases in DeFi, gaming, and more.

The Coinomist
What Is a Bullish Market? How to Spot One Before It Happens

What Is a Bullish Market? How to Spot One Before It Happens

Learn what a bullish market is, its key characteristics, and how to identify early signs before a full bull market develops. Gain insights into market trends and strategies.

The Coinomist
Trump’s “US Crypto Reserve” Plan: A Game Changer or Just Talk?

Trump’s “US Crypto Reserve” Plan: A Game Changer or Just Talk?

It takes just one post from Trump to stir the crypto market. Recently, he announced on Truth Social that the evaluation of a strategic crypto reserve is in progress as part of his broader Trump crypto policy.

Anahit Avetisyan
Trump’s Crypto Tax Plan: Smart Policy or Risky Gamble?

Trump’s Crypto Tax Plan: Smart Policy or Risky Gamble?

There’s been a lot of talk about possible changes to crypto tax policies in the U.S. One of the more controversial ideas floating around is “Trump no tax on crypto.” As Trump adopts a more crypto-friendly stance, major rumors have surfaced that he’s considering a 0% tax on crypto gains.

Anahit Avetisyan
MORE
Wealth, Influence, and Bitcoin: The Market Moves of the Ultra-Rich

Wealth, Influence, and Bitcoin: The Market Moves of the Ultra-Rich

Billionaires have a significant impact on digital asset prices, often driving instability and engaging in crypto market manipulation. This view is echoed by American entrepreneur David Wolfe.

The Coinomist
The New Crypto Sports Economy: Sponsorships, Fan Tokens, and NFTs 

The New Crypto Sports Economy: Sponsorships, Fan Tokens, and NFTs 

Crypto companies are shaking up crypto sport, partnering with clubs and stadiums for high-profile sponsorships. This means big bucks for athletes, thanks to advertising and fan tokens.

The Coinomist
MORE