---
title: "How Bitcoin Mining Works: Proof of Work and Hardware"
url: "https://bip39-phrase.com/how-bitcoin-mining-works/"
language: "en"
published: "2024-12-12T00:00:00+00:00"
updated: "2026-10-19T00:00:00+00:00"
---

[ Bitcoin Basics ](/topics/bitcoin/) Published December 12, 2024 Updated October 19, 2026 

# How Bitcoin Mining Works: Proof of Work and Hardware

![How Bitcoin Mining Works: Proof of Work and Hardware](/wp-content/uploads/2024/12/how-bitcoin-mining-works-hero.webp) 

Bitcoin mining is the process that adds new blocks to the blockchain and issues new bitcoins. Miners collect waiting transactions into a candidate block and hash its header over and over until the result falls below a target set by the network, a search that takes the whole network about ten minutes on average. The first miner to succeed broadcasts the block and collects the block subsidy, 3.125 BTC since the April 2024 halving, plus the fees of the transactions it included.

## Bitcoin Mining at a Glance

| Parameter             | Value                                                                    |
| --------------------- | ------------------------------------------------------------------------ |
| Target time per block | 10 minutes on average                                                    |
| Difficulty adjustment | Every 2,016 blocks (about two weeks), by at most a factor of four        |
| Block subsidy         | 3.125 BTC since block 840,000 (April 2024), halving every 210,000 blocks |
| Next halving          | Block 1,050,000, expected in 2028                                        |
| Hash function         | SHA-256, applied twice to the 80-byte block header                       |
| Network hash rate     | About 1,000 EH/s in October 2026                                         |

The subsidy and difficulty rules are part of Bitcoin’s consensus code, in Bitcoin Core’s [validation.cpp](https://github.com/bitcoin/bitcoin/blob/master/src/validation.cpp) and [pow.cpp](https://github.com/bitcoin/bitcoin/blob/master/src/pow.cpp); the hash rate figure is [mempool.space’s estimate](https://mempool.space/mining).

![A technician installing an ASIC miner into a server rack](/wp-content/uploads/2024/12/a-technician-installing-an-asic-miner-into-a-server-rack.webp)

## Why Does Bitcoin Need Mining?

Mining solves two problems at once. It decides who adds the next block to the shared ledger without anyone being in charge, and it makes rewriting history expensive: changing a confirmed block means redoing its proof of work and that of every block after it, faster than the rest of the network can extend the chain ([Bitcoin white paper](https://bitcoin.org/bitcoin.pdf), section 4). It is also the only way new coins are issued, which the white paper compares to gold miners spending resources to add gold to circulation. When two versions of the chain compete, nodes follow the one with the [most accumulated proof of work](/longest-chain-in-blockchain-explained-security-consensus-forks/).

Without mining, Bitcoin would need a central operator to order transactions and stop double spending. Instead, miners spread around the world compete for each block, which makes the network hard to censor or manipulate.

## How Is a New Block Found, Step by Step?

1. **Pick transactions.** A miner takes transactions from its [mempool](/bitcoin-mempool/), usually the highest fee rates first, until the block reaches the limit of 4 million weight units.
2. **Add the coinbase transaction.** The first transaction in the block pays the subsidy plus all the fees to the miner. Its coins can’t be spent until another 100 blocks have been mined ([Bitcoin developer guide](https://developer.bitcoin.org/devguide/block%5Fchain.html)).
3. **Build the header.** The 80-byte header holds the previous block’s hash, a Merkle root that summarizes the transactions, a timestamp, the current target and a 32-bit nonce.
4. **Hash and repeat.** The miner hashes the header with double SHA-256 and checks whether the result is below the target. If not, it changes the nonce, or other fields once the nonce runs out, and tries again, trillions of times per second on a single machine.
5. **Broadcast.** When a hash falls below the target, the miner sends the block to its peers. Every node checks it, adds it to its copy of the chain if it is valid, and miners start on the next block on top of it.

Each block references the previous one, so altering an old transaction would change that block’s hash and break every link after it. That chain of hashes, backed by the work behind it, is what makes the ledger tamper-resistant.

## How Does the Difficulty Adjustment Work?

Every 2,016 blocks, nodes compare how long those blocks took with the two weeks they should have taken and move the target by the same ratio, never by more than a factor of four in one step ([Bitcoin developer guide](https://developer.bitcoin.org/devguide/block%5Fchain.html)). More machines make blocks arrive early and raise the difficulty; machines switching off do the opposite. The result is a steady rhythm of about one block every ten minutes, whatever the [network hash rate](/hash-rate/), which stood at around 1,000 EH/s in October 2026.

## How Do Miners Get Paid?

The subsidy started at 50 BTC per block and halves every 210,000 blocks, roughly every four years, as the `GetBlockSubsidy` function in Bitcoin Core’s validation.cpp sets out:

| Blocks                | Subsidy per block | Halving date         |
| --------------------- | ----------------- | -------------------- |
| 0 – 209,999           | 50 BTC            | Launch, January 2009 |
| 210,000 – 419,999     | 25 BTC            | 28 November 2012     |
| 420,000 – 629,999     | 12.5 BTC          | 9 July 2016          |
| 630,000 – 839,999     | 6.25 BTC          | 11 May 2020          |
| 840,000 – 1,049,999   | 3.125 BTC         | 20 April 2024        |
| 1,050,000 – 1,259,999 | 1.5625 BTC        | Expected in 2028     |

Fees make up the rest, and today they are small next to the subsidy: over the 1,008 blocks to 18 October 2026, fees were about 0.55% of everything miners earned ([mempool.space](https://mempool.space/mining)). As the subsidy keeps halving, fees will have to carry more of the cost of securing the network. The white paper anticipated this, saying the incentive can eventually move entirely to transaction fees once all the coins are issued.

## From CPUs to ASICs: What Hardware Is Used?

### Four Generations of Hardware

The first blocks were mined on ordinary computer processors. Graphics cards took over around 2010 and 2011 because they compute many hashes in parallel, FPGAs followed, and from 2013 ASICs, Application-Specific Integrated Circuits that do nothing but SHA-256, made every earlier option obsolete. A modern ASIC miner produces hundreds of terahashes per second, and its key figure is efficiency in joules per terahash (J/TH): the lower it is, the less electricity each unit of work costs.

### Modern Mining Farms

Professional operations run large farms with thousands of ASICs. Location, cooling and regular hardware upgrades decide who stays competitive in these cost-driven environments.

![A large facility filled with rows of Bitcoin mining machines](/wp-content/uploads/2024/12/a-large-facility-filled-with-rows-of-bitcoin-mining-machines.webp)

## What Does a Mining Setup Need?

### Choosing the Right Hardware

Choosing an ASIC means balancing hash rate, efficiency and price. Top models cost more but use less electricity per terahash, which matters more as difficulty climbs and as each halving cuts revenue.

### Electricity and Infrastructure

Electricity is usually the largest running cost, so miners look for cheap, stable power, often from hydroelectric, geothermal or otherwise stranded energy. Cooling, a reliable internet connection and routine maintenance keep the machines running.

### Mining Pools

A single machine competing alone would wait decades on average to find a block, so most miners join pools. A pool combines its members’ hash rate, finds blocks more often and pays each member according to the shares of work they submitted ([Bitcoin developer guide](https://developer.bitcoin.org/devguide/mining.html)). Choose a reputable pool with clear fees and prompt payouts, and send the payouts to a wallet whose keys you control.

## Is Bitcoin Mining Profitable?

[Mining profitability](/bitcoin-mining-still-profitable/) depends on the bitcoin price, the difficulty, the price of electricity and the efficiency of the hardware. Rising prices lift miners’ revenue, while rising difficulty or power costs narrow their margins. Each halving cuts the subsidy in half overnight, so miners plan for those dates and upgrade hardware to stay above break-even.

## How Much Energy Does It Use?

A lot, by design: proof of work turns electricity into security. Critics consider the consumption excessive, while supporters argue that the neutrality and security it buys justify it and that miners increasingly use surplus or renewable power. The [Cambridge Bitcoin Electricity Consumption Index](https://ccaf.io/cbnsi/cbeci) publishes a running estimate of the network’s power demand for anyone who wants the numbers.

## How Does Proof of Work Secure the Network?

Mining validates every transaction that enters a block, prevents double spends and makes old blocks expensive to change. To rewrite recent history, an attacker would need more hash rate than the rest of the network combined, and even then could not spend other people’s coins or break the rules, because every full node checks each block. Because miners operate in many countries, there is no single point of failure, although pools concentrate a large share of hash rate, which is worth watching.

## What Will Change Next?

- **More efficient ASICs:** better chip designs keep lowering the energy needed per terahash.
- **Geographic shifts:** regulation and power prices move miners between countries.
- **Cheaper and cleaner power:** waste heat recovery, stranded energy and renewables lower costs.
- **Fees after halvings:** each halving makes fees a larger share of income, so demand for block space, including from layer-two systems such as the Lightning Network that settle on-chain, matters more over time.

Mining will keep changing as hardware improves and the subsidy shrinks, but its job stays the same: ordering transactions and making the ledger costly to rewrite. For how mining fits together with keys, transactions and nodes, see [how Bitcoin works](/how-does-bitcoin-works/).

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