Bitcoin Mining Explained: A Basic Tutorial for Newcomers
Bitcoin mining, a core component of the world's leading cryptocurrency, is a process that revolves around a complex math puzzle. This puzzle validates transactions on the Bitcoin network, a task that earns the winner a block reward plus transaction fees from the block's users.
The first miner to solve the puzzle adds the block to the blockchain and broadcasts it to the network. This process, known as proof-of-work (PoW), is the backbone of Bitcoin's decentralized system.
In 2025, the block reward is worth approximately $218,750 at a Bitcoin price of $70,000. However, the high upfront costs, electricity bills, and competition make Bitcoin mining a challenging endeavour for beginners.
Electricity costs significantly impact profitability, with regions offering low rates, such as Texas or Kazakhstan, being more profitable. Miners increasingly use renewable energy sources such as hydropower, solar/wind, and grid stabilization to reduce their carbon footprint.
In fact, critics have highlighted the carbon footprint of Bitcoin mining, especially in regions using coal-powered grids. However, the Bitcoin Mining Council reports that 59.5% of mining uses sustainable energy in 2025.
Bitcoin mining is often conducted in pools due to competition from large mining farms. Miners use specialized machines like the Bitmain Antminer S19 Pro, significant electricity, mining software, cooling systems, and (optionally) join a mining pool.
Beginning in 2026, Bitcoin miners in Germany will become known due to regulatory and tax reporting requirements that increase transparency about mining activities and income. Miners are required to submit tax declarations related to mining profits by July 31, 2026.
Every 10 minutes, new Bitcoin transactions are grouped into a "block." Miners are rewarded with newly minted bitcoins for their efforts, making it a cornerstone of Bitcoin's decentralized system. The network difficulty is at an all-time high (88.4 trillion as of June 2025), requiring more computing power.
Despite its challenges, Bitcoin mining plays three critical roles: confirming transactions, securing the network, and creating new bitcoins. With a fixed supply cap of 21 million coins, mining is the only way new bitcoins enter circulation.
In conclusion, Bitcoin mining is a complex yet fascinating process that underpins the decentralized nature of Bitcoin. As more miners turn to renewable energy sources and regulatory bodies increase transparency, the future of Bitcoin mining looks promising. However, it remains a challenging undertaking, requiring significant resources and knowledge.
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