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What is Bitcoin mining and how does it work?

Bitcoin mining is the process of creating new bitcoins by solving extremely complicated math problems that verify transactions in the currency. When a bitcoin is successfully mined, the miner receives a predetermined amount of bitcoin.

Bitcoin is a cryptocurrency that’s gained a wide following due to its wild price swings and surging value since it was first created in 2009.

As prices of cryptocurrencies and Bitcoin in particular have skyrocketed in recent years, it’s understandable that interest in mining has picked up as well. But for most people, the prospects for Bitcoin mining are not good due to its complex nature and high costs. Here are the basics on how Bitcoin mining works and some key risks to be aware of.

Bitcoin mining statistics

  • A miner currently earns 3.125 Bitcoin (about $193,750 as of early October 2024) for successfully validating a new block on the Bitcoin blockchain.
  • Creating Bitcoin consumes 166.75 terawatt-hours of electricity each year, more than is used by the Netherlands or the Philippines, according to the Cambridge Bitcoin Electricity Consumption Index.
  • It would take nine years of household-equivalent electricity to mine a single bitcoin as of August 2021.
  • The price of Bitcoin has been extremely volatile over time. In 2020, it traded as low as $4,107 and reached an all-time high of $73,750 in March 2024. As of October , it traded for about $62,000.
  • While it depends on your computing power and that of other miners, the odds of a modestly powered solo miner solving a Bitcoin hash were about 1 in 26.9 million in January 2023.
  • The United States (37.8 percent), Mainland China (21.1 percent) and Kazakhstan (13.2 percent) were the largest bitcoin miners as of January 2022, according to the Cambridge Electricity Consumption Index.