Key Definition: Bitcoin mining is the process of using specialised computers to verify transactions on the Bitcoin network and add them to the blockchain. Miners compete to solve complex mathematical puzzles, and the first to succeed earns newly created bitcoin as a reward. This process secures the network and controls the release of new bitcoin into circulation.

Current State: As of December 2025, the Bitcoin network's computational power (hashrate) has reached approximately 1 zettahash per second, representing a near-doubling from mid-2024 levels. Bitcoin mining consumes an estimated 175 terawatt-hours of electricity annually, roughly equivalent to the energy usage of Poland or Argentina. Following the April 2024 halving, miners now receive 3.125 bitcoin per block successfully mined, down from the original 50 bitcoin when the network launched in 2009.

What Is Bitcoin Mining?

If you have ever wondered how new bitcoin comes into existence, the answer is mining. But this is not mining in the traditional sense. There are no pickaxes, no tunnels, and no physical digging. Instead, bitcoin mining involves powerful computers solving mathematical problems to keep the network running securely.

Think of it this way: the Bitcoin network needs people to check and confirm transactions. When you send bitcoin to someone, that transaction needs to be verified as genuine. Miners do this work. In return, they are rewarded with newly created bitcoin. This system achieves two things at once: it processes transactions and releases new bitcoin into circulation in a controlled, predictable way.

The bitcoin price and bitcoin value are directly connected to this mining process. Unlike government currencies, which can be printed without limit, the rate of new bitcoin creation is fixed by code. This built-in scarcity is one reason many people see bitcoin as a store of value.

How Does Bitcoin Mining Work?

Bitcoin uses a system called Proof of Work. Here is how it works in simple terms:

Transactions are bundled together into groups called blocks. Miners then race to solve a mathematical puzzle connected to that block. The puzzle involves finding a specific number (called a hash) that meets certain criteria. It is essentially guesswork at incredible speed. The first miner to find the correct answer gets to add the block to the blockchain and receives the mining reward.

A new block is added roughly every ten minutes. The network automatically adjusts how difficult the puzzle is based on how many miners are competing. More miners means harder puzzles. Fewer miners means easier puzzles. This keeps the rate of new bitcoin creation steady regardless of how much computing power joins the network.

What Equipment Do Miners Use?

In the early days of Bitcoin, people could mine using ordinary home computers. Those days are long gone. Today, bitcoin mining requires specialised machines called ASICs (Application-Specific Integrated Circuits). These devices are built for one purpose only: solving Bitcoin's mathematical puzzles as fast as possible.

Modern mining machines cost between £2,000 and £20,000 each. They consume significant electricity and generate considerable heat, which is why most mining now happens in large facilities called mining farms. These operations seek out locations with cheap electricity, often from renewable sources like hydropower.

Bitcoin Mining Then vs Now

What Is the Bitcoin Halving?

Every 210,000 blocks (roughly every four years), the mining reward is cut in half. This event is called the halving. It is written into Bitcoin's code and cannot be changed.

When Bitcoin launched in 2009, miners received 50 bitcoin per block. After the first halving in 2012, this dropped to 25. Then 12.5 in 2016, then 6.25 in 2020. The most recent halving occurred in April 2024, reducing the reward to 3.125 bitcoin per block.

The halving ensures that the total supply of bitcoin will never exceed 21 million. At current rates, the final bitcoin is expected to be mined around the year 2140. This predictable supply schedule is fundamentally different from traditional currencies and is central to bitcoin's appeal as a hedge against inflation.

How Much Energy Does Bitcoin Mining Use?

Bitcoin mining is energy-intensive. The Cambridge Centre for Alternative Finance estimates the network consumes approximately 175 terawatt-hours annually. That is comparable to the electricity usage of countries like Poland or Thailand.

However, the picture is more nuanced than headlines suggest. According to Cambridge's 2025 Digital Mining Industry Report, 52.4 percent of Bitcoin mining now uses sustainable energy sources, including 42.6 percent renewables (hydropower, wind, solar) and 9.8 percent nuclear. Natural gas accounts for 38.2 percent, while coal has dropped to just 8.9 percent, down from 36.6 percent in 2022.

Many miners actively seek out renewable energy because it tends to be cheaper. Countries like Iceland and Norway, where geothermal and hydropower are abundant, have become popular mining destinations. Some operations even use otherwise wasted energy, such as flared natural gas from oil drilling sites.

Where Does Bitcoin Mining Happen?

Until 2021, China dominated bitcoin mining, accounting for over 65 percent of the global hashrate. When China banned cryptocurrency mining, miners relocated rapidly. Today, the United States leads with approximately 35-40 percent of global mining power. Kazakhstan, Canada, Russia, and Germany are also significant players.

This geographic shift has made Bitcoin more decentralised. No single country now controls a majority of the network's computing power, which improves security and resilience.

Is Bitcoin Mining Profitable?

Profitability depends almost entirely on electricity costs. The cost to mine one bitcoin varies dramatically by location: as low as £1,100 in Iran (where electricity is heavily subsidised) to over £260,000 in Ireland (where electricity is expensive).

For most individuals in the UK, home mining is not economically viable. Professional mining operations secure wholesale electricity rates and achieve efficiencies impossible for home miners. If you are interested in bitcoin exposure, buying bitcoin directly is typically more practical than attempting to mine it.

The Bottom Line

Bitcoin mining is the engine that keeps the network running. It verifies transactions, secures the blockchain, and releases new bitcoin according to a predictable, transparent schedule. While the days of mining bitcoin on a laptop are over, understanding how mining works helps explain why bitcoin has value and how its supply is controlled.

Whether you are considering buying cheap bitcoin or simply trying to understand this new form of money, knowing about mining gives you insight into what makes Bitcoin fundamentally different from the currencies controlled by central banks.

Sources

Cambridge Centre for Alternative Finance, Cambridge Digital Mining Industry Report, April 2025

Cambridge Centre for Alternative Finance, Cambridge Bitcoin Electricity Consumption Index, 2025

CoinDesk, Bitcoin Hashrate Sees Sharpest Post Halving Drop Since 2024 Amid China Machine Shutdowns, December 2025

CoinWarz, Bitcoin Hashrate Chart, December 2025

Coinbase, What is Bitcoin halving?, 2024

iShares, Bitcoin halving: What is it? And why does it matter?, 2024

NFT Evening, Electricity Costs to Mine 1 Bitcoin at Home Around the World, February 2025

Brave New Coin, U.S. Leads Global Bitcoin Hashrate Growth Contributing Over 40% by End of 2024, January 2025