Bitcoin Mining Complete Guide: From Principles to Practice, Can Individuals Still Participate in 2025?

What Is Mining Exactly?

Imagine if you could obtain BTC at no cost—how wonderful would that be? But reality isn’t so ideal. Let’s start with the basics.

The essence of Bitcoin mining is that miners use computational power to keep records for the Bitcoin network and earn BTC rewards in return. Here, “miners” refer to participants who own mining hardware and continuously contribute computing power; “mining machines” are the hardware devices performing the calculations.

A simple analogy: if you’re a bookkeeper, you get paid each time you complete a record. But in the Bitcoin system, recording isn’t done by hand with a pen; it’s automatically performed through mining hardware. Interestingly, anyone can become a miner—though the barrier seems low, the actual costs are high.

Miners play a crucial role—they are the primary source of cryptocurrency supply and directly influence the market’s supply and demand dynamics.

How Does Mining Work? An Explanation of the Proof-of-Work Mechanism

Bitcoin mining relies on a system called “Proof-of-Work” (PoW). Understanding this mechanism helps explain why mining becomes increasingly difficult.

The process works like this:

The Bitcoin network continuously processes a large number of transactions, which are bundled into “blocks.” Each miner performs complex calculations—searching for a hash value that meets certain criteria. When a miner successfully finds this specific hash, they broadcast the new block to the entire network, and other nodes verify it.

Once the majority of nodes confirm the block’s validity, the new block is permanently added to the blockchain. The miner who finds the block receives the corresponding reward.

From another perspective, mining is like solving an extremely complex math problem—you need to try multiple solutions to find the right answer. The difficulty of the problem adjusts automatically based on the total network hash rate. Currently, the total network hash rate exceeds 580 EH/s, making it nearly impossible for a single machine to successfully mine a block.

What Profits Can Mining Bring?

Since people are willing to invest significant capital into mining, the profits are attractive. Miners’ income mainly comes from two sources:

Block Rewards are predefined by the system; each time a block is recorded, the miner earns a certain amount of BTC. Due to halving events occurring every four years, the reward has decreased from an initial 50 BTC to 25 BTC, then 12.5 BTC, 6.25 BTC, 3.125 BTC, and so on.

Transaction Fees are paid by users and vary depending on network congestion. When on-chain activity is high, users are willing to pay higher fees to speed up transaction confirmation.

From a purely economic perspective, mining can indeed generate income for miners. But more importantly, without miners performing mining activities, the Bitcoin network would have no one to record transactions, ultimately leading to paralysis. In the end, mining is the key to maintaining the entire Bitcoin ecosystem. Because it is profitable, people keep participating, ensuring the network’s normal operation.

How Has the Mining Industry Evolved?

Since 2009, the mining industry has undergone dramatic changes across three dimensions.

Hardware Upgrades and Iterations

In the early days (2009-2012), ordinary CPUs could mine Bitcoin. As participation increased, GPU and graphics card mining became popular around 2013. In the same year, specialized ASIC chips designed specifically for mining emerged, gradually becoming industry standards. Today, common ASIC miners include Antminer, Avalon, and others.

Changes in Mining Methods

Initially, miners chose solo mining—individuals or small groups mining independently. But as total network hash rate skyrocketed, the success probability for solo mining plummeted, and payback periods extended indefinitely. To address this, miners began to form pools—grouping multiple miners’ hardware to mine collectively (Pool Mining). This evolved further into cloud mining, where mining farms are hosted in the cloud, and hash power is aggregated via mining pools (Mining Pool). Well-known pools include F2Pool, Poolin, BTC.com, AntPool, etc.

Reward Distribution Mechanism Changes

During the solo mining era, individuals or organizations that found blocks received all the rewards. With the advent of pooled mining, rewards are distributed proportionally based on each participant’s hash power.

These changes reflect a clear trend: equipment costs have skyrocketed from hundreds to thousands or even tens of thousands of dollars; mining has shifted from individual activity to group and industrial operations; profit sharing has moved from exclusive to proportional distribution.

Will Individuals Still Be Able to “Mine for Free” in 2025?

This is a question many are concerned about. Frankly, the answer is: almost impossible.

In the early days, the total network hash rate was low, and individuals could easily mine large amounts of BTC using personal computers—costs were minimal, almost “free mining.” But now, if you still use a regular computer for solo mining, you will hardly mine any BTC—your hash rate is too low to compete for recording rights.

If you join a mining pool for collective mining, in theory, you can earn BTC proportional to your hash contribution. The problem is, the earnings are often completely eaten up by electricity costs and hardware depreciation, sometimes resulting in losses.

From the industry evolution trend, it is clear that ordinary individuals cannot mine large amounts of BTC as easily as in Satoshi Nakamoto’s era. In the future, whether individuals or institutions, to profit from mining, they will need to: purchase specialized mining hardware (usually starting at $1,000–$2,000 or more); join mining pools for collective mining.

A special reminder: the speed of hardware iteration is extremely fast. Buying outdated or old models will severely reduce profitability. Even if you buy the latest mining machines, without joining a pool, your single-machine hash rate is insignificant compared to large farms, making it extremely unlikely to mine BTC.

It’s important to emphasize that this does not mean individuals cannot mine at all. In fact, anyone can participate, but due to lower hash power, they may never mine any BTC—or if they do, it will be very rare and insufficient to cover costs.

How to Start Mining? A Practical Roadmap

To participate in mining, there are two main paths: setting up your own mining farm or outsourcing mining services. Regardless of choice, thorough preparation is essential.

Step 1: Confirm Local Policy Permissions

Mining is an energy-intensive industry, especially PoW-based mining. Before investing, thoroughly investigate local policies regarding mining activities to avoid legal risks.

Step 2: Decide on Purchase or Rental, Self-Operation or Hosting

If you have professional knowledge, you can buy mining hardware and operate it yourself. Be aware that mining noise may disturb neighbors.

If you’re not an expert, you can buy hardware and entrust a professional third-party hosting service, or directly rent hash power (usually including hosting). Most importantly, never buy mining hardware or hash power from unknown platforms—choose products recognized in the market.

Common mining hardware comparisons:

Hash rate rental platforms comparison:

Step 3: Officially Start Mining

After selecting hardware or hash power platform and completing configuration, start the mining process. When the pool successfully finds a block, you will receive BTC proportional to your contribution. Afterwards, you can choose to sell or hold based on market conditions.

How Much Does It Cost to Mine One Bitcoin?

Understanding mining costs is crucial for evaluating profitability. Total mining cost = hardware cost + electricity cost + cooling system cost + operational maintenance cost

Specifically:

• Hardware investment: purchase of specialized mining machines
• Electricity consumption: ongoing electricity expenses
• Cooling and heat dissipation: air conditioning, fans, or liquid cooling systems to maintain optimal temperature
• Daily operations: network maintenance, equipment upkeep, miscellaneous expenses
• Pool fees: commissions paid to mining pools

According to publicly available data, as of May 2025, the average total cost to mine one BTC is approximately $108,256. This figure fluctuates based on electricity prices, hardware efficiency, and regional factors.

How Is Mining Revenue Calculated?

Mining income mainly depends on four variables: hash rate, network difficulty, Bitcoin price, and electricity costs.

The calculation involves complex formulas, but many free online tools are available. By inputting your hash rate, electricity costs, and other parameters, you can get a rough estimate of potential earnings.

The key is to regularly monitor these variables and adjust your strategy accordingly.

The Impact of Bitcoin Halving on Mining

Bitcoin halving occurs every four years—a major event where the block reward is cut in half to control inflation.

The 2024 halving, reducing the block reward from 6.25 BTC to 3.125 BTC, will have profound effects on the industry:

A 50% reduction in rewards means, if Bitcoin price remains unchanged, miners’ profits are halved. This may cause some high-cost or outdated equipment miners to shut down, triggering a short-term “hashrate drop.” However, efficient miners will fill the gap quickly.

As on-chain activity increases (e.g., inscriptions, Layer2 solutions), transaction fee income rises. During the inscription boom in 2023, fee revenue accounted for over 50% of miners’ total income.

How do miners respond?

1. Hardware upgrades—phasing out old miners and adopting more energy-efficient models to reduce electricity costs.

2. Strategy optimization—some pools support automatic algorithm switching, mining multiple coins simultaneously to maximize overall profit; or using futures contracts to lock in BTC prices and hedge against price drops.

3. Migration—seeking regions with cheap electricity and friendly policies; increasing renewable energy use.

What is the long-term trend after halving?

Small independent miners will face further shrinking space, with hash power increasingly concentrated in large mining farms. Big farms leverage economies of scale and cheap electricity to dominate the market, gradually pushing out small miners.

This may also lead to new mining models, such as utilizing waste energy sources or combining AI-powered hash rental farms, to improve overall profitability.

Summary

Bitcoin mining is fundamentally a process where miners use computational power to help the network record transactions and earn BTC rewards. Driven by this incentive mechanism, mining has evolved into a large-scale industry, gradually dominated by big capital, characterized by hardware specialization, collective operation, and profit sharing.

Looking ahead, solo mining with CPU or GPU by individuals is almost futile—no BTC will be mined. To participate and profit, one must buy specialized mining hardware or rent hash power for collective operation. Before investing, it’s essential to verify local policies and hardware authenticity.

Mining has shifted from early gold rush dreams to a highly professional industry. Participants need thorough preparation, rational cost-benefit assessment, and strategic planning to succeed in this field.