What is Bitcoin mining?

In the cryptocurrency market, there are various ways to obtain Bitcoin, among which mining is an important method. Unlike direct purchase, P2P trading, or airdrops, mining usually requires professional hardware equipment, electricity cost investment, a certain technical threshold, and relies on the proof of work mechanism. Miners compete for the right to record new blocks by solving complex mathematical problems through computing, in order to receive Bitcoin as a reward.

Although mining requires a significant initial investment, it offers a sustainable and relatively stable long-term revenue model compared to purchasing from the market. This is especially true in regions with low electricity costs and abundant computational resources, where miners can achieve higher profitability. Therefore, Bitcoin mining is not only a core component of Bitcoin’s issuance mechanism but also plays a crucial role in network security, decentralized consensus, and ecosystem stability.

Mining is a way to obtain cryptocurrencies (Image source:https://www.guancha.cn/ ）

The operation mechanism of mining

In the early days of Bitcoin, anyone with a high-performance computer could participate in mining. However, as the Bitcoin network evolved and more participants joined, mining difficulty increased exponentially. As of 2025, the computational power required to mine a single Bitcoin is approximately six times higher than when the first Bitcoin blocks were mined in 2009. This shift has rendered personal mining with household computers impractical, leading to the emergence of specialized mining equipment.
Professional Bitcoin mining equipment, commonly referred to as “Mining Rig”, is specifically designed hardware for efficiently performing hash calculations, typically utilizing Application-Specific Integrated Circuit (ASIC) technology to conduct hash operations at extremely high speeds. Compared to earlier mining with Central Processing Units (CPU) or Graphics Processing Units (GPU), ASIC mining rigs offer superior energy efficiency and computational power.

Simply put, mining works by having miners bundle new transactions into a block and solve complex calculations to find a valid hash (proof of work). Once solved, the block is added to the blockchain, and the miner receives Bitcoin as a reward. To maintain a block generation time of about 10 minutes, the network adjusts mining difficulty based on overall computing power.

In short, through mining, transactions are verified, new Bitcoins are introduced into circulation, and the security and decentralization of the network are maintained. Although the mining process requires a large amount of computing resources and energy consumption, it is the foundation of the normal operation and trust mechanism of the Bitcoin network.

Cryptocurrency Mining Operation Process (Image Source: https://www.bitpanda.com/academy/en/lessons/what-is-Bitcoin-Mining)

Components preparation for mining

Bitcoin mining relies on high-performance computing devices to perform hash calculations, and Mining Rigs, as the core equipment for mining, typically require multiple hardware components to work together. Here are the key components needed to build a Bitcoin Mining Rig, along with their main functions:

1. Mining Rig or GPU

   ASIC Mining Rig: The mainstream device for Bitcoin mining, specifically optimized for the SHA-256 algorithm, providing high hash rates and energy efficiency.

   GPU: A common component in early mining, but with the increasing mining difficulty, GPUs are mainly used to mine other cryptocurrencies with PoW mechanisms.

2. Motherboard

   Connecting and managing all computing components requires compatibility with multiple GPU slots or dedicated interfaces required for ASIC Mining Rigs.

3. Central Processing Unit (CPU)

   Handling the basic computational requirements of mining rigs, a stable CPU still helps optimize system operation.

4. Memory (RAM)

   Responsible for storing the temporary data required for the operation of the mining rig, usually 8GB or more of RAM is sufficient to support mining operations.

   
   Bitcoin Mining Rig (Image Source:https://www.banklesstimes.com/cryptocurrency/bitcoin/mining/）

5. Storage Device

   Mining Rig requires an operating system and mining software to support its operation, and at least 5GB of storage space (SSD is recommended for faster speed).

6. Power Supply Unit (PSU)

   Mining Rig consumes a relatively high amount of power, and it is necessary to ensure that the power supply meets the power requirements of the Mining Rig and has a good energy efficiency ratio to optimize electricity costs.

7. Cooling System

   Mining rigs generate a large amount of heat during long-term high-load operation and require efficient cooling systems such as fans, liquid cooling systems, or dedicated cooling equipment for mining rigs to prevent hardware overheating affecting performance.

8. Internet connection

   When operating mining rigs, a high-speed and stable network connection is required to ensure that the mining rig can submit computing results in real-time and continuously synchronize blockchain data.

9. Mining software

   Including mining pool software (such as CGMiner, BFGMiner) and system support (such as Windows, Linux, Hive OS).

10. Cryptocurrency Wallet

    Any mined Bitcoin needs to be stored in a secure encrypted wallet, and it is recommended to use a cold wallet to reduce the risk of hacker attacks.

Operation Steps of Mining

1. Assemble Mining Rig Hardware

   Install motherboard: Fix the motherboard on the mining rig frame, ensuring stability and leaving enough space for heat dissipation.

   Install CPU and RAM: Insert the processor (CPU) and memory (RAM) into the motherboard to provide the necessary computing support for the mining rig.

   Power Supply Unit (PSU): Ensure all components (motherboard, GPU/ASIC, cooling system) are connected to the appropriate power source.

2. Configure Operating System

   Install Operating System: Install Windows, Linux, or other mining operating systems on storage devices (SSD or HDD).

   Optimization settings: Adjusting the mining software parameters, including overclocking settings, power management, fan control, etc., to optimize hash rate and energy consumption ratio.

3. Connect to the mining pool and start mining

   Create a crypto wallet: set up a Bitcoin wallet to receive mining rewards.

   Joining a mining pool: It is more difficult to mine independently, so most miners will join a mining pool (such as F2Pool, AntPool) to increase income stability.

   Start Mining: Running mining software to make the Mining Rig start calculating hash values, participating in block validation and maintaining the Bitcoin network.

4. Monitoring and Maintenance

   Real-time monitoring of hash rate and temperature: Use the mining pool dashboard or remote management tools to ensure the normal operation of the mining rig and avoid overheating or hardware failures.

   Regular maintenance: optimize computing power and power management according to changes in electricity costs and mining difficulty, and regularly clean dust to keep the equipment well ventilated.

Conclusion

Bitcoin mining has evolved from early individual computer mining to a large-scale industry that relies on high-hashrate ASIC devices and cooperation with mining pools. Although mining has certain technical barriers and electricity costs, it remains a key way to obtain BTC and support the security of the blockchain network. However, the Bitcoin mining industry has always faced challenges such as significant policy regulation, energy efficiency, and sustainability. For potential miners, reasonable equipment investment, stable operational management, and insight into market trends will be crucial to obtaining stable mining returns.