Bitcoin Mining for Dummies - Step-by-step guide to mine bitcoin (2023)

What is Bitcoin Mining?

The decentralized nature of Bitcoin means that transactions are broadcasted to the peer-to-peer network and once broadcasted, needs to be verified, confirming that the transaction is valid and then having the transaction recorded on the public transaction database, which is known as the Bitcoin blockchain.

  • From Start to Finish: How Does it Work?
  1. Mining
  2. Proof of Work
  3. Mining Difficulty
  • What is Bitcoin Cloud Mining?
  • Bitcoin Mining Hardware
  • What is Proof-of-Work?
  • What is Bitcoin Mining Difficulty?
  • How Can You Start Mining Bitcoins?
  • How Can You Make Money in Bitcoin Mining?

Miners basically are the people involved in the processing and verifying transactions before then recording the transactions on the Bitcoin blockchain.

Miners will then receive transaction fees in the form of newly created Bitcoins.

So, what’s involved in the actual mining process?

Computers are used to include new transactions onto the Bitcoin exchange and while computers will find it relatively easy to complete the verification process, the process becomes more difficult as computer capability becomes more sophisticated with faster processing speeds.

Attempting to get Bitcoin users from around the world to agree on a single version of the transaction is the challenge and it comes down to what is referred to as “proof of work.”

Bitcoin protocol requires those looking to include additional blocks of transactions on the Bitcoin blockchain to provide proof that the user expanded a scarce resource, in the case of mining being the processing power of the computers used for the verification process.

(Video) How To Mine Bitcoin - Easy & Simple

Miners compete with everyone on the peer-to-peer network to earn Bitcoins. The faster the processing power, the more attempts are made by the hardware to attempt to complete the verification, and thereforeearning the miner the Bitcoins that are highly sought after along with transaction fees.

The Bitcoin network is self-evolving, to ensure that the time taken for a miner to win a block is steady at approximately 10 minutes.

The speed of processing power in Bitcoin mining is referred to as the hash rate and the processing power is referred to as the hash power of the hardware.

To get slightly more technical and introduce some of the more common terms used in the Cryptoworld, the mining process is where Bitcoin mining hardware runs a cryptographic hashing function on a block header.

For each new hash attempted, the mining software will use different numbers as the random element, the number referred to as the nonce.

Once a proof of work is produced, through the random calculation of nonces until the correct nonce is discovered, a new block is essentially discovered, which is then verified and agreed upon by the peer-to-peer network.

At this stage, the miner is rewarded with a certain number of Bitcoins, currently set at 12.5 coins, though will halve every 210,000 blocks. In addition to the Bitcoins received, the minor will also be awarded the transaction fees paid by users within the successfully mined block, which is of far greater incentive for miners as the number of Bitcoins per block continues to decline.

From Start to Finish: Bundle Transactions, Validation, Proof of Work, Blockchains and the Network

The end to end process can perhaps be best described by the following chart that incorporates the various steps involved from mining to ultimately receiving well-earned Bitcoins and transaction fees:

(Video) Cryptocurrency Mining For Dummies - FULL Explanation

Bitcoin Mining Step-by-Step

  1. Verify if transactions are valid.
  2. Transactions are bundled into a block
  3. The header of the most recent block is selected and entered into the new block as a hash.
  4. Proof of work is completed.
  5. A new block is added to the blockchain and added to the peer-to-peer network.

Proof of Work Step-by-Step

  1. A new block is proposed.
  2. A header of the most recent block and nonce are combined and a hash is created.
  3. A Hash number is generated.
  4. If the Hash is less than the Target Value the PoW has been solved.
  5. The miner receives the reward in Bitcoins and transaction fees.
  6. If the Hash is not less than the Target Value, the calculation is repeated and that takes the process of mining difficulty.

Mining Difficulty Step-by-Step

  1. More miners join the peer-to-peer network.
  2. The rate of block creation increases.
  3. Average mining times reduce.
  4. Mining difficulty increases.
  5. The rate of block creation declines.
  6. Average mining time returns to the ideal average mining time of 10 minutes.
  7. The cycle continues to repeat at an average 2-week cycle.

What is Bitcoin Cloud Mining?

Bitcoin cloud mining provides a medium to receive newly mined Bitcoins, without the need to own Bitcoin mining hardware or even have any mining ‘knowhow’, allowing the mining world to not only attract the technically minded but a far wider audience, who lack the technical knowledge needed to get into Bitcoin mining.

The Bitcoin novice has certainly embraced the availability of Bitcoin cloud mining, so what’s the difference between Bitcoin mining and cloud mining?

It boils down to the location of the Bitcoin mining hardware. For the Bitcoin miner, the user will buy and set up and maintain the Bitcoin mining rigs, which is not something for the technophobes as sizeable electricity costs also a consideration, mining rigs requiring plenty of ventilation and cooling, not to mention 24-7 processing.

Cloud mining is supported by mining companies setting up the mining rigs at their own facility, with a cloud miner only needing to register and purchase shares or a mining contract. The user doesn’t have to do anything else, with the mining company doing all the work and giving the cloud miner returns on a regular basis. The user essentially buying a proportion of the Bitcoin miners hash power.

One of the major concerns over cloud mining is fraud however, there have been plenty of reports of fraudulent activity, not to mention lower profits and even mining companies having the ability to halt operations ifBitcoin’s price fall below certain levels, so some due diligence on a mining company is recommended, with some basic steps to reduce the risk of being defrauded including:

  • No mining address and/or no user selectable pool.
  • No ASIC vendor endorsement. If there are no advertisements from the ASIC vendor, the mining company may not even own the hardware.
  • No photos of the hardware or data center of the mining company.
  • No limit imposed on sales or does not display how much hash rate sold against used in mining.
  • Referral programs and social networking. A mining company willing to pay high referral fees should be avoided as these may well be Ponzi schemes.
  • Anonymous operators should certainly be avoided…
  • No ability to sell your position or get the money out upon sale.

Bitcoin Mining Hardware

Mining hardware has changed since the early days of Bitcoin when Bitcoin was mined with CPUs. However, as miners have continued to use their technical abilities to develop hardware capable of earning at a much greater number of Bitcoins, leaving CPU and laptop users behind, using a laptop is now unlikely to yield a single Bitcoin even if mining for years.

In place of CPUs came Graphic Processing Units (GPUs), as miners found that using high-end graphics cards were far more effective in mining for Bitcoins. The use of GPUs increased mining power by as much as 100x, with significantly less power usage, saving on sizeable electricity bills.

Next came FPGAs, Field Programmable Gate Aray, the improvement here being in the power usage rather than actual mining speed, with mining speeds slower than GPUs, while power consumption fell by as much as 5x.

Power savings led to the evolution of mining farms and the Bitcoin mining industry as it is known today, where Bitcoin mining power is controlled by a mining few more commonly known as the Bitcoin Cartel.

Since FPGAs, the mining community shifted to Application Specific Integrated Circuits (ASICs), where an ASIC is a chip designed for the sole purpose of mining, with no other functional capabilities.

(Video) How To Mine Cryptocurrency At Home (Step By Step Guide For Beginners) Bitcoin, Ethereum, GPU, Crypto

While an ASIC chip has only a single function, it offers 100x more hashing power, while also using significantly less power than had been the case with CPUs, GPUs, and FPGAs.

Evolution of software has slowed, with nothing in the marketplace at present or in development that is expected to replace ASICs, with ASIC chips likely to see minor tweaks at best to try and squeeze out greater efficiencies, though it will only be a matter of time before the Bitcoin world comes up with something newer and faster as miners catch up on hashing power.

What is Proof-of-Work?

Proof of work is also referred to as PoW. All of the blocks in a Bitcoin blockchain have a series of data referred to as nonces, these are meaningless data strings attached to each block of a Bitcoin blockchain.

Mining rigs/computers need to search for the right nonce and, with no simple way in which to find the correct nonce, random computation is used until the correct data string is calculated by the mining rig.

The proof of work is therefore difficult to produce, while considered simple to verify, the production of a proof of work being a random process, requiring mining rigs to calculate as many computations per second as possible so as to increase the probability of producing the proof of work.

It is for this reason that hash rates/hash power are key considerations in the ability of a mining pool being able to deliver reasonable returns on investment.

What is Bitcoin Mining Difficulty?

Bitcoin mining difficulty is the degree of difficulty in finding a given hash below the target during the proof of work.

Bitcoin’s target value is recalculated every 2,016 blocks, with mining difficulty inversely proportional to a target value. As mining difficulty increases, target value declines and vice-versa.

In basic terms, as more miners join the Bitcoin network, the rate of block creation increases, leading to faster mining times. As mining times speed up, mining difficulty is increased, bringing the block creation rate back down to the desired 10 minutes as mentioned previously.

Once the mining difficulty is increased, the average mining time returns to normal and the cycle repeats itself about every 2-weeks.

(Video) How to start Bitcoin mining for beginners (SUPER EASY) - ULTIMATE GUIDE (2021)

How Can You Start Mining Bitcoins?

To begin mining and become a node within the peer-to-peer network, and begin creating Bitcoins, all that’s needed is a computer with internet access.

Wallets can be downloaded for free as can miner programs and once downloaded its ready to go.

The reality is that your desktop computer or laptop will just not cut it in the mining world, so the options are to either make a sizeable investment and create a mining rig, or joining a mining pool or even subscribe to a cloud mining service, the latter requiring some degree of due diligence as is the case with any type of investment.

In mining pools, the company running the mining pool charges a fee, whilst mining pools are capable of solving several blocks each day, giving miners who are part of a mining pool instant earnings.

As a minimum, you’ll need a GPU and somewhere cool for the mining hardware with fans set up to keep the hardware cool, with a stable internet connection also a must.

Two GPU manufacturers are Ati Radeon and Nvidia, whilst Radeon cards are considered much better for mining than Nvidia cards. While you can try to mine with GPUs and gaming machines, income is particularly low and miners may, in fact, lose money rather than make it, which leaves the more expensive alternative of dedicated ASICs hardware.

The best ASICs chips on the market that might be essential for Bitcoin mining in consideration of price per hash and electrical efficiency are Antrouter R1, Antminer S9 and BPMC Red Fury USB, Antminer the most expensive with a price tag of $2,264.51.

How Can You Make Money in Bitcoin Mining?

Miners make Bitcoin by finding proof of work and creating blocks, with the current number of Bitcoins the miner receives per block creation standing at 12.5 coins and then the transaction fees for each block, which is approximately 1.5 Bitcoin equivalent in value for each block.

The ASIC mining hardware is estimated to pay for itself in about 15-days, assuming a retail price of just under $2,500 and after that it ultimately boils down to the rate of increase in miners, which then requires greater computing power to be able to maintain the same level of coin creation and receipt of transaction fees.

In a nutshell, if you’re going to try to use a CPU or laptop, mining pools are going to be a possible option and even then you’re not going to be making much if any, as your contribution to the mining pool’s mining power will be limited at best, which leaves you with cloud mining as the only real option unless you’re willing to invest in the hardware and accept the electricity costs that come from all year round mining and that’s before the necessary upgrades and new equipment that is to be expected with overuse.

(Video) What is Bitcoin Mining? (In Plain English)

Can you get rich off the mining process? More likely from the appreciation in Bitcoin value than the mining itself, with a few mining pools accounting for the lion’s share of Bitcoin’s mining power making it difficult for new miners to enter the fray.

While users have looked at the cloud mining option, the real experience is in owning your own mining rig and learning the technology and processes behind Bitcoin mining, something that you wouldn’t experience through cloud mining.


How do I start bitcoin mining for beginners? ›

How To Mine Bitcoin
  1. Choose and Set Up Your Bitcoin Mining Hardware. Start by choosing the hardware you'll use to mine Bitcoin. ...
  2. Create a Dedicated Bitcoin Wallet. If or when you successfully validate a Bitcoin block, you need a valid Bitcoin wallet to get paid. ...
  3. Configure Your Mining Equipment. ...
  4. Start Mining.
30 Mar 2022

How long it will take to mine 1 bitcoin? ›

It takes around 10 minutes to mine just one Bitcoin, though this is with ideal hardware and software, which isn't always affordable and only a few users can boast the luxury of. More commonly and reasonably, most users can mine a Bitcoin in 30 days.

How do you mine Bitcoins step by step? ›

How to mine Bitcoin in 5 steps
  1. The first step is to determine profitability and viability of your Bitcoin mining operation. ...
  2. The second step is to actually acquire your Bitcoin mining hardware. ...
  3. The third step is to download Bitcoin mining software. ...
  4. The fourth step is to select and join a Bitcoin mining pool.
4 Mar 2022

How do you mine Bitcoin in simple terms? ›

Bitcoin runs on a decentralized computer network or distributed ledger that tracks transactions in the cryptocurrency. When computers on the network verify and process transactions, new bitcoins are created, or mined. These networked computers, or miners, process the transaction in exchange for a payment in Bitcoin.

How much do you have to mine for 1 bitcoin? ›

The fact is that even the most efficient Bitcoin mining operation takes roughly 155,000 kWh to mine one Bitcoin.

How much do I need to invest to mine 1 bitcoin? ›

“With the majority of public miners running latest [generation] rigs, and with strategic power management contracts in place, our internal research puts the number closer to $12,000 for public miners,” he said. “But even within a company, it will vary by facility.

What happens if you mine 1 bitcoin? ›

So there's not a way to mine just 1 Bitcoin. You either win the block reward and receive 6.25 Bitcoin or you get nothing.

How much BTC can you mine a day? ›

How many Bitcoin can you mine a day? Based the mining hardware inputs provided, 0.00047881 Bitcoin can be mined per day with a Bitcoin mining hashrate of 140.00 TH/s, a block reward of 6.25 BTC, and a Bitcoin difficulty of 36,762,198,818,467.00.

How much RAM do you need to mine Bitcoin? ›

RAM — Higher RAM does not mean that you get a better mining performance, so we recommend using anywhere between 4GB and 16GB of RAM. When deciding what size RAM best suits your needs, look at the operating system for mining and whether or not virtual memory is used.

What equipment do you need to mine Bitcoin? ›

You need either a graphics processing unit (GPU) or an application-specific integrated circuit (ASIC) in order to set up a mining rig.

Is Bitcoin mining easy to learn? ›

Although mining is a competitive business, starting is still relatively easy. In the early years of Bitcoin, hobbyists could simply boot up some software on their computer and get started right away. Those days are long gone, but setting up a dedicated Bitcoin miner is not as hard as it may seem at first.

Can I mine Bitcoin on my phone? ›

Crypto mobile mining can be performed on iOS and Android systems via solo or pool mining services. are created using a distributed computing process called mining.

What formula is used to mine Bitcoin? ›

To include mining pool fees, the equation would be: breakeven = (base operating cost per day + (coin earnings per day * pool fee)) / TH. The pool fee would be a decimal, for example 4% becomes 0.04 in this calculation.)

Is Bitcoin mining illegal? ›

Bitcoin mining is legal in most countries, but several jurisdictions have banned this practice. China, one of the world's largest economies, has outlawed bitcoin mining. The nation's government has also prohibited all cryptocurrency transactions.

Is Bitcoin mining real? ›

Bitcoin mining refers to ensuring that transactions are valid and added to the Bitcoin blockchain correctly using a global network of computers running the Bitcoin code. The process of mining is also the means by which new Bitcoins are created.

How can I get 1 bitcoin for free? ›

Here are some popular and genuine ways to earn free Bitcoins:
  1. #1) Pionex – Use Bitcoin Growth Trading Bot to Earn Bitcoin.
  2. #2) Bitstamp – Using Staking Rewards.
  3. #3) Tipping Bots And Platforms.
  4. #4) Playing Online and Offline Games.
  5. #5) Mining Browsers And Free Mining Software.
  6. #6) Earning Free Bitcoins Through Bounties.
25 Oct 2022

Can you mine 1 bitcoin by yourself? ›

If you have enough computing power and the cost and availability of electric power is not an issue for you, you can opt to mine for bitcoins solo. Note, though, that it would most likely take you longer to generate a bitcoin than if you pool your resources with others.

How much electricity does a mining rig use per day? ›

For starters, graphics cards on mining rigs work 24 hours a day. That takes up a lot more power than browsing the internet. A rig with three GPUs can consume 1,000 watts of power or more when it's running, the equivalent of having a medium-size window AC unit turned on.

How much do Bitcoin miners make a day? ›

Bitcoin mining is still extremely profitable in 2022. Bitcoin miners are currently mining around $20 million worth of Bitcoin per day. That's $600 million per month. A mining machine costs $2,000-$20,000, making it difficult for anyone but professional miners to mine.

Is mining still profitable 2022? ›

As the profitability of Bitcoin mining dropped in 2022, top crypto miners' share prices have also fallen. Fortunately, Canaccord Genuity analyst Joseph Vafi says the most efficient Bitcoin miners are still turning a significant profit on their rigs.

Is bitcoin mining profitable for beginners? ›

Today, bitcoin mining is barely profitable. Costs are too high and rewards are too low for most miners. Bitcoin's bear market has put intense stress on mining profitability.

How long do BTC miners last? ›

Generally, ASIC miners are projected to last for about 3-5 years, although your machine can last more than this range if used and maintained well enough. It could also break down within a few months if not maintained properly or used in poor conditions.

How many bitcoins are left? ›

How Many Bitcoins Are There Now in Circulation?
Total BTC in Existence19,203,168.75
Bitcoins Left to Be Mined1,796,831.3
% of Bitcoins Issued91.444%
New Bitcoins per Day900
Mined Bitcoin Blocks762,507

Is mining worth it 2022? ›

Is cyptocurrency mining still profitable in 2022? Yes it is. Although the old way of mining is very expensive and no longer profitable after expenses the new mining route is better and conducive. All you have to do is invest in mining companies to mine your coins for you for a profits and percentages of mining fees.

What is the fastest bitcoin miner? ›

AntMiner L3+ is one of the fastest Bitcoin miners commercially available in the market. It has a built-in control panel, which means no separate host computer is needed for operation. AntMiner L3+ has a PCI Express connector, and its weight is around 13.23 pounds.

What is the best miner for bitcoin? ›

The Best Bitcoin Mining Software for 2022
  • Best Overall: CGMiner.
  • Best for Customization: BFGMiner.
  • Best for Ease of Use: MultiMiner.
  • Best Centralized Management: Awesome Miner.

How much is 1 Satoshi right now? ›

1 SATS = 0.0002119 USD.

How much can a normal PC mine Bitcoin? ›

Home-Based Crypto Mining Profitability

With a normal PC, this could generate anywhere from less than a penny to around a dollar a day on the high end ($0.0001 – $1 USD). If you're a gamer with a fast GPU-powered PC, you could generate $1 – $10 a day, or maybe more.

How many GPU does it take to mine 1 Bitcoin? ›

Answer: There is no minimum or limit to the number of GPUs you can use when mining, and can even start with 1. However, if you are into a serious mining business, a rig of 6 GPUs is recommended.

How much is a mining rig? ›

A typical ASIC mining rig can cost anywhere between $2,000 and $20,000. That is a broad range and it does not tell the full story of the quality of the product. It is important to understand that the price of a mining rig is not the only factor when buying a miner.

What is the most profitable miner? ›

Hash Rates of Bitramo Miners

Interestingly, in spite of their high hash rates, the power consumption of Ramo1, Ramo 2, and Ramo X miners are reasonably moderate. As a result of these two key factors, Bitramo miners have emerged as the most profitable mining hardware in the market.

What is the best wallet to mine to? ›

Ledger Nano

Ledger Nano is probably the best Ethereum wallet for mining and storing your Ethereum coins. Similar to Trezor, it's a hardware wallet that allows you to store the private keys of your coins in a physical wallet.

Which Bitcoin is easier to mine? ›

Answer: Monero is the easiest cryptocurrency to mine now because it can be mined via browser extensions and free software over websites. It is even mined via crypto jacking. The mining code can also easily be incorporated into apps and websites to facilitate mining.

What are the risks of Bitcoin mining? ›

Cryptocurrency Mining Puts U-M and Personal Data at Risk
  • Slows performance for legitimate users.
  • Can leave openings for attackers to exploit.
  • Increases electricity and computing costs.
  • Ties up IT staff who must troubleshoot performance or security issues.
  • Puts U-M data and your privacy at risk.

Where are the most bitcoin miners? ›

The leading bitcoin mining by countries and their hash rates are as follows:
  • United States: 35.4%
  • Kazakhstan: 18.1%
  • Russia: 11.23%
  • Canada: 9.55%
  • Ireland: 4.68%
  • Malaysia: 4.58%
  • Germany: 4.48%
  • Iran: 3.1%

How much Shiba can you mine in a day? ›

So if you are using GPU(> 4GB) and if it is giving 1Mh/s as a processing speed you will be able to mine approx 1361.13436026 SHIB in 24 hours.

Is Bitcoin mining profitable for beginners? ›

Today, bitcoin mining is barely profitable. Costs are too high and rewards are too low for most miners. Bitcoin's bear market has put intense stress on mining profitability.

Can anyone start mining Bitcoin? ›

Anyone can participate in the Bitcoin mining process, but unless you have access to powerful computers known as ASICs (that's “application-specific integrated circuits”), your chances of winning a Bitcoin reward are pretty low.

What equipment do I need to mine Bitcoins? ›

Answer: The leading Bitcoin mining hardware is Antminer S19 Pro, WhatsMiner M30S+, WhatsMiner M30S++, AvalonMiner 1246, and WhatsMiner M32-62T. These vary in terms of hash rate ratings, power consumption, and price.

How much can 1 Bitcoin miner make in a day? ›

Mining Revenue

In February 2022, one Bitcoin mining machine (commonly known as an ASIC), like the Whatsminer M20S, generates around $12 in Bitcoin revenue every day depending on the price of bitcoin.

How much Bitcoin can you mine in a day? ›

How many Bitcoin can you mine a day? Based the mining hardware inputs provided, 0.00047881 Bitcoin can be mined per day with a Bitcoin mining hashrate of 140.00 TH/s, a block reward of 6.25 BTC, and a Bitcoin difficulty of 36,762,198,818,467.00.

Can I get rich from Bitcoin mining? ›

Bitcoin mining can be a lucrative way to make money with Bitcoin, but not for individual investors. Because of the computing power required, the upfront and ongoing costs can far outpace mining rewards earned.

Can you mine Bitcoin with no money? ›

Key Takeaways. By mining, you can earn cryptocurrency without having to put down money for it. Bitcoin miners receive bitcoin as a reward for completing "blocks" of verified transactions, which are added to the blockchain.

How much does a mining rig cost? ›

A typical ASIC mining rig can cost anywhere between $2,000 and $20,000. That is a broad range and it does not tell the full story of the quality of the product. It is important to understand that the price of a mining rig is not the only factor when buying a miner.

How much money does a Bitcoin miner make? ›

The processing power required to mine Bitcoin is extremely high, but Bitcoin miners receive 6.25 BTC in reward, roughly $143,000, for mining each block of transactions in the blockchain.

What is the fastest way to mine 1 Bitcoin? ›

Well, it's not really possible to mine just 1 Bitcoin because each block reward is 6.25 BTC. It used to be 12.5 BTC until May 2020 when there was the halving and the block reward was cut in half. So there's not a way to mine just 1 Bitcoin. You either win the block reward and receive 6.25 Bitcoin or you get nothing.


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