How Bitcoin is Mined – A Complete Guide

There is a high chance that you’ve heard about the phrase “Bitcoin mining,” which is why you searched Google for a term like “how Bitcoin is mined,” leading you to our wonderful website.

So, let me start by answering what’s Bitcoin mining? 

Bitcoin mining is a process that adds transaction records to Bitcoin’s public ledger, also named the blockchain. While this process is far less glamorous and equally uncertain, this mining process is often done by high-performance computers that can solve highly complex computational maths problems, which can not be done manually. However, the luck and work needed to solve such problems are enormous. Basically, the chance of a high-powered computer solving one of these problems is around 1 in 16 trillion.

So, now you might ask why Bitcoin mining is needed. The answer to that is that it is needed so that each and every transaction can be confirmed and every one of the networks can access the ledger. It is also used to distinguish legitimate Bitcoin transactions from illegitimate transactions. And a miner gets a reward every time a new block is sealed off.

So, instead of wasting any more time, let’s explore how Bitcoin is mined!

Is Bitcoin Mining a Profitable Venture

During its initial days, the Bitcoin miners or the early enthusiasts used to confirm transactions using their CPUs. However, things have changed drastically, with people starting to mine Bitcoins using industrial-level infrastructure. The easy money is not so easy anymore, and due to the growing nature of Bitcoin, it has become a lot more appealing for individuals and as well as for large corporations, which eventually has increased the competition by quite a few folds.

So, now you may ask, is Bitcoin mining worth it?

Err!! Yes! but currently, it is only profitable for those using high-powered machinery. If you are searching how Bitcoin is mined while planning for a smaller setup and smaller pools, you’ll spend more money on your electricity bill rather than generating some from mining. So, if you don’t have access to cheap electricity and high-powered machinery, getting a profit from Bitcoin mining is next to impossible.

Additionally, if you stay in an area where the chances of power outages and network problems are high and you are still searching for the term how Bitcoin is mined, then you must abandon the search process immediately.

However, as new mining software is developing and reaching new heights along with sustainable and cheap electricity coming into play, Bitcoin mining can be profitable for individuals in the near future.

So, if you are searching for the term ‘how Bitcoin is mined’ with the intent of starting the mining process with a small setup, then this might not be the best time for you.

However, if you want to invest in high-powered machinery, there are a few things you should remember!!


Choosing the Right Hardware for Bitcoin Mining

As Bitcoin mining involves a lot of complexity, it’s very important to invest in the right set of hardware.

While answering how Bitcoin is mined? one can avoid hash rate. For Bitcoin mining hardware, the hash rate is a pretty big deal. It is basically the number of calculations that hardware can perform each second. And obviously, the higher the hash rate is, the higher the chance of solving the mathematical problem and collecting your reward. Hash rates are measured in mega-hashes per second, giga-hashes per second, and tera-hashes per second.

Now comes electricity. It’s natural that the more powerful your hardware is, the more electricity you are going to need to run it. So, it’s always a great idea to consider the hardware’s electricity consumption in watts and to know how expensive your next electricity bill might be. Spending all your hard-earned money on electricity is never a good idea.

To better understand your average energy consumption, you can look at the energy consumption number and hash rates. You’ll have to divide the hash counts by the number of watts to know that. So, you can now use an electricity price calculator or check your electricity bill to know how much it might cost you in cash.

If you are searching for the term ‘how Bitcoin is mined’ with the intent of starting to mine Bitcoin, you must not overlook the electricity aspect, as it can cost you significantly.  

Additionally, you might need your computer to run the mining hardware in a few cases. It’s quite natural that your computer will draw power in addition to the mining hardware, which might reduce your profitability even further.

Hardware for Bitcoin Mining

During the initial days of Bitcoin mining, many people were drawn to it. At that point, Bitcoin’s value was nowhere near what it is today. This motivated many people to mine Bitcoin without the intention of extracting a lot of profit from it. At that point, miners used decently powerful computers and laptops to generate hash sequences and confirm transactions.

Later, at some point, miners discovered the potential of high-end Graphics Cards to increase Bitcoin mining power. The Graphics card draws far less power, and results were much better than before. Later, dedicated mining hardware was introduced, which, in return, increased the mining capability by quite a few folds. The newly launched mining hardware eventually helped to start the Bitcoin mining industry.

CPU for Bitcoin Mining

While searching for the term ‘how Bitcoin is mined,’ the CPU is the least powerful part of the rig. During the initial days of Bitcoin mining, a computer and a decently powerful CPU were used to do all the jobs. However, with each passing day, miners started innovating, making CPU mining obsolete.  

GPU for Bitcoin Mining

GPUs or Graphic Processing Units can’t be ignored while answering how Bitcoin is mined. These were specifically designed to calculate the complex polygons in video games, which made them great for solving complex transaction blocks.

Even though they cost significantly more than CPUs, these GPUs gave miners an added advantage. Soon, the widespread use of GPUs gave birth to mining rigs, which were nothing but computers that could solve complex calculations. Those rigs were used to mine part-time and also served other computational purposes.

However, with the introduction of hardware specifically designed for mining, GPU mining is mostly dead nowadays.

FPGA for Bitcoin Mining

You can’t just avoid FPGA mining while searching for the term ‘how Bitcoin is mined.’ It is basically an integrated circuit that can be configured after being built. FPGA eventually helped mining hardware manufacturers buy chips in bulk and customize them for the purpose of Bitcoin mining.

The FPGA device gave the miners a much-needed power efficiency benefit and ease of use, which quickly changed the Bitcoin mining landscape. For example, a 600MH/sec graphic card could consume up to 400 watts of power, while an FPGA mining device would consume only 80 watts of power while giving a hash rate of 826 MH/sec.  


ASICs can not be avoided while searching for how Bitcoin is mined. It is basically a microchip designed for the sole purpose of mining Bitcoin. This technology increased the hashing power up to 100x while consuming significantly less energy. According to some experts, ASIC is the end-of-the-line technology, as nothing can replace it in the near future.

So, this is ‘how Bitcoin is mined.’ However, with recent political developments, many of our readers from India have asked us many times, ‘Is Bitcoin mining legal in India?’ So, in our next article, we share our views on the legalities of Bitcoin mining in India. Also, as you have finished reading this article, don’t forget to read our guide to stay safe on the internet.  

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