What is Bitcoin mining?

Bitcoin mining is the process of using computing power to verify transactions, secure the Bitcoin network, and create new Bitcoin.

Miners compete to solve a mathematical puzzle — the first to find a valid solution adds a new block of transactions to the blockchain and earns a reward (currently 3.125 BTC per block after the April 2024 halving).

Mining is how Bitcoin achieves consensus without any central authority — no bank, government, or company decides which transactions are valid. The network's miners collectively make this decision through proof of work.

How Bitcoin mining works

Every 10 minutes (on average), a new block of Bitcoin transactions is added to the blockchain. Here is the process:

1. Transactions enter the mempool. When you send Bitcoin (for example, from your Bitwala wallet), the transaction is broadcast to the network and enters the mempool — a waiting area of unconfirmed transactions.

2. Miners select transactions. Each miner selects a batch of transactions from the mempool (prioritizing those with higher fees) and assembles them into a candidate block.

3. The puzzle. Miners race to find a number (called a nonce) that, when combined with the block data and processed through a cryptographic hash function (SHA-256), produces a result below a target value. This is the "proof of work" — it requires immense computing power to find but is trivially easy to verify.

4. Block found. The first miner to find a valid nonce broadcasts the block to the network. Other nodes verify the solution (instant verification) and the block is added to the blockchain.

5. Reward. The winning miner receives the block reward (3.125 BTC) plus all transaction fees from the included transactions. This is the only way new Bitcoin enters circulation.

The difficulty of the puzzle adjusts every 2,016 blocks (approximately every 2 weeks) to ensure blocks are found roughly every 10 minutes, regardless of how much computing power is on the network.

Why mining matters

Mining serves three critical functions:

Transaction validation: Miners verify that every transaction follows Bitcoin's rules — no double-spending, valid signatures, correct amounts. This is how the network prevents fraud without a central authority.

Network security: The computing power behind mining makes Bitcoin's blockchain practically impossible to tamper with. To alter historical transactions, an attacker would need to control more than 50% of the network's total computing power — currently an estimated cost of billions of dollars per day.

New Bitcoin creation: Mining is the only mechanism through which new Bitcoin is created. There will only ever be 21 million Bitcoin, and mining progressively releases them into circulation according to a predetermined, transparent schedule.

The halving: bitcoin's supply schedule

The block reward is cut in half approximately every 4 years (every 210,000 blocks) in an event called the halving. This is how Bitcoin controls its inflation:

2009: 50 BTC per block

2012: 25 BTC per block (1st halving)

2016: 12.5 BTC per block (2nd halving)

2020: 6.25 BTC per block (3rd halving)

2024: 3.125 BTC per block (4th halving)

~2028: 1.5625 BTC per block (expected 5th halving)

The final Bitcoin will be mined around the year 2140. After that, miners will be compensated entirely through transaction fees.

Each halving reduces the rate of new Bitcoin creation, making Bitcoin progressively scarcer. Historically, halvings have preceded significant price appreciation (though past patterns do not guarantee future results).

Bitcoin mining and energy

Bitcoin mining consumes significant electricity — the Cambridge Centre for Alternative Finance estimates the network uses approximately 100-150 TWh annually. This energy debate is one of the most discussed topics in crypto.

The energy argument against: Bitcoin's energy consumption is comparable to that of some small countries. Critics argue this is wasteful.

The energy argument for: Bitcoin's proof-of-work security model is what makes the network trustless and censorship-resistant. Proponents argue the energy secures a $1+ trillion monetary network and is comparable to the energy used by the traditional banking system (data centers, offices, ATMs, branches). Additionally, an increasing percentage of Bitcoin mining uses renewable energy — estimates range from 40-60% depending on the source and methodology.

Stranded energy utilization: Many mining operations deliberately locate near stranded or wasted energy sources — hydroelectric dams in remote areas, flared natural gas at oil fields, and curtailed renewable energy. In these cases, mining converts otherwise wasted energy into economic value.

For European Bitcoin holders using platforms like Bitwala, you do not mine Bitcoin yourself. You buy Bitcoin that was previously mined and is already in circulation. Your electricity consumption is limited to running the wallet app on your phone.

Can you mine Bitcoin at home?

In practical terms, profitable home Bitcoin mining is no longer feasible for most individuals. Mining difficulty has increased to the point where competitive mining requires specialized hardware (ASICs — Application-Specific Integrated Circuits) costing thousands of euros, access to very cheap electricity (below €0.05/kWh), and dedicated cooling and space.

European electricity prices (typically €0.20-€0.40/kWh) make home mining unprofitable in virtually all cases. For European users who want to accumulate Bitcoin, buying through a platform like Bitwala is far more cost-effective than attempting to mine.

FAQ

How are new bitcoins created?

New Bitcoin is created exclusively through mining. When a miner adds a new block to the blockchain, they receive a block reward of newly created Bitcoin (currently 3.125 BTC). This reward halves approximately every 4 years. No other mechanism creates Bitcoin — there is no central bank or issuer.

Is Bitcoin mining legal in Europe?

Yes. Bitcoin mining is legal throughout the European Union. MiCA does not regulate mining activities — it regulates crypto-asset service providers. However, mining operations must comply with local energy regulations and business licensing requirements.

Why does Bitcoin mining use so much energy?

The energy consumption is a deliberate security feature. The more computing power (and energy) required to mine, the more expensive it becomes to attack the network. This energy expenditure is what makes Bitcoin trustless — no central authority is needed because the cost of cheating exceeds the potential reward.

What happens when all 21 million Bitcoin are mined?

When the last Bitcoin is mined (estimated around 2140), miners will no longer receive block rewards. They will be compensated entirely through transaction fees paid by users. By that point, if Bitcoin continues to be widely used, transaction fees are expected to provide sufficient incentive for miners to continue securing the network.

Should I mine Bitcoin or buy it?

For European users, buying Bitcoin is almost always more cost-effective than mining. European electricity costs make mining unprofitable unless you have access to very cheap power. Platforms like Bitwala let you buy Bitcoin via SEPA at a fraction of what it would cost to mine the equivalent amount.

Last updated: April 14, 2026. This article is for informational purposes and does not constitute financial advice.