Bitcoin mining is the process in which specialized computers compete and work to add new blocks of transactions to Bitcoin’s blockchain.

In return, they have the chance to win newly issued bitcoin (BTC) tokens and earn transaction fees. This is known as proof of work (PoW), and it’s what keeps the entire network secure and operational.

Here we’ll show you how Bitcoin mining actually works, its profitability in 2026, what happens as block rewards continue to shrink, and the great debate around energy consumption.

Key takeaways

• Bitcoin mining involves specialized computers competing to add blocks of transactions to the network and earn new BTC and transaction fees.

• Mining secures the network through PoW by making it an economic impossibility to rewrite past transactions.

• Profitability depends on BTC’s price, electricity costs, and network difficulty. Most Bitcoin mining takes place at an industrial scale now.

What is Bitcoin mining?

Bitcoin mining is the mechanism that creates new BTC and maintains/protects the entire Bitcoin network.

Miners are specialized and often powerful computers that compete to solve complex mathematical puzzles. 

The first miner to solve it wins the right to add the next block of transactions to the blockchain and receive a reward in the form of freshly minted BTC tokens plus transaction fees. 

This process is called proof of work (PoW) and it ensures that no single entity or group can alter the ledger in any way. 

How does Bitcoin mining work - step by step?

Here’s how the process of Bitcoin mining works in simple steps.

1. Miners gather pending transactions from the mempool.

2. They build a block template with those transactions plus a special coinbase transaction.

3. Miners repeatedly change a tiny number (nonce) and constantly run the block’s data through the SHA-256 hashing algorithm until a winning combination is found.

4. The aim is to find a hash that is lower than the current mining difficulty level.

5. When a valid hash is found, the miner broadcasts a new block to the network.

6. Other nodes on the network verify the new block. The miner then receives a block reward plus all the transaction fees in that block.

Block rewards, halving, and Bitcoin’s supply schedule

There are two rewards available for Bitcoin miners to earn: the block reward (newly minted BTC) and transaction fees.

Bitcoin launched in 2009 with a block reward of 50 BTC. This halves every 210,000 blocks (approximately every four years).

After the previous halving in April 2024, the block reward was 3.125 BTC. The next halving event should take place around March 2028, reducing the reward to 1.5625 BTC.

As the block reward shrinks, transaction fees are expected to become miners’ main source of income.

Mining hardware - CPU, GPU, ASIC, and why home mining is less viable today

Bitcoin mining began with ordinary CPUs, then moved on to GPUs. In 2026, the only profitable hardware is the ASIC (application-specific integrated circuit) machines that are built for one thing, mining Bitcoin.

Bitmain and MicroBT are popular manufacturers of high-efficiency ASIC units.

One modern ASIC can generate hundreds of terahashes per second (TH/s). Thousands of these machines can be found in data centers that leverage cheap power.

For most individuals, the upfront costs, electricity, noise, and heat make home mining difficult and unprofitable in 2026.

Is Bitcoin mining profitable in 2026?

The profitability of mining Bitcoin depends on three key factors: the price of BTC, your electricity costs, and the network hashrate (which determines difficulty).

Here’s a breakdown of the costs of running a single, high-efficiency ASIC miner running at €0.10 per kWh in Europe:

Entry-level / high-efficiency ASIC miner unit = €150-1,000+ 

Daily revenue (based on current network conditions & BTC price at €65,000) = €20-28

Electricity cost (daily) = €8-11

Profit (daily after electricity) = €3-7 (before hardware maintenance, cooling, and depreciation.)

In the long run, most small-scale operations lose money once all costs are factored in. Industrial-scale operations with access to electricity rates between $0.05 and $0.08 per kWh are capable of turning a profit.

Is Bitcoin mining legal?

Bitcoin is legal in the vast majority of countries, including all EU member states and the UK. It is considered a business activity similar to running a data center. 

Some regions have additional rules regarding energy use and reporting, but no outright bans exist in the EU or UK as of 2026. 

Around nine countries, including mainland China, have outlawed large-scale Bitcoin mining activities due to energy/regulatory concerns. 

The energy debate - myth vs. measurement

Bitcoin mining is an energy-intensive process, and it consumes a significant amount of electricity that is comparable to the annual consumption of mid-sized countries, according to the Cambridge Bitcoin Electricity Consumption Index.

But Bitcoin’s energy mix is changing. Now, miners are increasingly tapping into renewable sources and stranded energy sources like geothermal and flared natural gas that would otherwise go to waste.

Critics have argued that the energy use is incredibly wasteful. Supporters argue that mining incentivizes renewable energy development and support in remote areas, which can offer flexibility to help stabilize demand on power grids.

The debate is ongoing, but the numbers show valid points for each side of the argument.

Bottom line

Bitcoin mining serves two vital roles. First, it creates new bitcoin, and secondly, it secures the entire Bitcoin network through PoW.

What began as a hobby activity that anyone could participate in, Bitcoin mining has become a professional, industrial-scale operation dominated by major entities with large-scale facilities.

Either way, the process is the engine and safeguard of the entire system, keeping it secure, decentralized and operational for the foreseeable future.

FAQ

What is Bitcoin mining in simple terms?

Bitcoin mining is a process where powerful computers compete to guess a unique number and add new blocks of transactions to the Bitcoin blockchain. Winners earn newly created BTC and transaction fees.

How does Bitcoin mining actually work?

Miners gather unconfirmed transactions into a template block. They then race to solve a math puzzle. The first miner to solve it broadcasts its new block to the network. Once verified, the winner earns the block reward and transaction fees.

Is Bitcoin mining still profitable in 2026? 

Profitability is highly dependent on BTC’s price, power cost, and network difficulty. Bitcoin mining can be profitable for larger operations with cheap electricity and good hardware. For most individuals and smaller setups, energy costs often outpace earnings with all expenses included. 

Can I mine Bitcoin at home in 2026?

Yes, but it is rarely profitable. Electricity costs, heat, noise, and maintenance costs have made mining from home obsolete. Large-scale mining farms with extremely low energy overheads have a better chance of earning profits.

Is Bitcoin mining legal in the EU?

Yes. Bitcoin mining is legal across the European Union and UK. It is treated as a legitimate business. Some countries have specific energy-reporting requirements, though there is no ban on mining itself.

What happens when all 21 million bitcoins are mined?

The final bitcoin is expected to be mined somewhere around 2140. Afterwards, block rewards will no longer exist and miners will only earn transaction fees. The network is designed to keep running securely beyond this period.



Investing in crypto‑assets is associated with risks, including high volatility and the potential loss of capital. Inform yourself thoroughly about the risks before making an investment decision. The information provided in this article is strictly for educational and informational purposes and should not be construed as financial or investment advice.