How is Bitcoin mined? This question has captured the attention of crypto enthusiasts more than ever as Bitcoin’s value and the popularity of digital currencies continue to rise. Bitcoin mining is the process of validating transactions and adding new blocks to the blockchain using a Proof of Work algorithm and specialized mining hardware (ASICs or GPUs).
Imagine a few people sitting around a table, tasked with solving a very difficult Sudoku puzzle. Each participant, on their own and without knowing what the others are doing, begins trying different numbers in the squares of the grid until all the Sudoku rules are followed.
There is no shortcut in this process, and only through trial and error can the correct answer be found. The first person to solve the puzzle correctly wins and receives a reward. Once the answer is found, it is available for everyone to use, but only the person who discovered it receives the reward. In this competition, speed, accuracy, and persistence are the key factors for success.
In Bitcoin mining, miners are like those people solving a very difficult Sudoku puzzle. Just as solving a Sudoku puzzle requires finding the correct combination of numbers while following the rules, in Bitcoin mining, a specific number must be found that matches the encryption rules of the network. This can only be done through trial and error, and whoever finds the correct answer first is rewarded with Bitcoin. This process is called Bitcoin mining.
Imagine a few people sitting around a table, tasked with solving a very difficult Sudoku puzzle. Each participant, on their own and without knowing what the others are doing, begins trying different numbers in the squares of the grid until all the Sudoku rules are followed.
There is no shortcut in this process, and only through trial and error can the correct answer be found. The first person to solve the puzzle correctly wins and receives a reward. Once the answer is found, it is available for everyone to use, but only the person who discovered it receives the reward. In this competition, speed, accuracy, and persistence are the key factors for success.
In Bitcoin mining, miners are like those people solving a very difficult Sudoku puzzle. Just as solving a Sudoku puzzle requires finding the correct combination of numbers while following the rules, in Bitcoin mining, a specific number must be found that matches the encryption rules of the network. This can only be done through trial and error, and whoever finds the correct answer first is rewarded with Bitcoin. This process is called Bitcoin mining.
Bitcoin mining has undergone significant evolution since 2009, not only technically but also economically and practically. In the early days, when Satoshi Nakamoto launched the Bitcoin network, mining was possible with regular CPUs, and individuals could earn several Bitcoins in a few hours using a home laptop.
However, over time, as the network grew and mining difficulty increased, this method became ineffective. By 2010, users turned to using graphics cards (GPUs). This period coincided with the beginning of the first small scale mining farms, where multiple graphics cards were used together to generate more power.
Around 2011 to 2013, some miners turned to programmable chips (FPGAs), which were more energy efficient and offered somewhat higher speeds than GPUs. However, this phase quickly gave way to the main turning point in Bitcoin mining: the emergence of ASIC devices.
From 2013 onward, companies like Bitmain began producing devices specifically built for one purpose: mining Bitcoin at the highest possible speed. These devices industrialized the mining process, and ordinary users were practically no longer able to compete.
Today, Bitcoin mining is primarily carried out in countries with cheap electricity, such as China (before the ban), Kazakhstan, Russia, the United States, and even in Iran, on a large scale with high capital investments. Thus, the path of Bitcoin mining has transformed from a simple home activity to a billion dollar industry requiring technical expertise, strong infrastructure, and complex economic strategies.
Today, Bitcoin mining has become an industrial and highly complex process. Therefore, mining Bitcoin requires specific equipment and tools, and in addition to acquiring them, one must also gain the technical knowledge necessary to operate them as a miner. The list of required equipment and their applications is as follows:
Today, with the increasing complexity of Bitcoin mining, the first prerequisite is high processing power to solve Bitcoin's complex cryptographic problems. For this purpose, the only specialized device for this task is an ASIC miner.
This device is designed to solve the SHA 256 algorithm, which is Bitcoin's hash algorithm. With its high processing power, it can generate and analyze a large number of hashes per second, increasing the chances of solving them.
ASIC miner devices consume a significant amount of power and require a powerful power supply to maintain stable performance. The PSU provides consistent power with the appropriate voltage for the miner and helps protect the device from damage caused by voltage fluctuations.
Mining devices generate a significant amount of heat during the mining process, and if the temperature rises too much, they can suffer from reduced efficiency or even irreversible damage. For this reason, a cooling system is built into these devices to prevent such occurrences. This system includes fans, heat sinks, and, in some cases, water or oil cooling systems.
To connect to mining pools and exchange data with the Bitcoin network, a stable internet connection with low latency is required. Therefore, having a proper and stable internet network to quickly send hashes to the network, receive new block information, and synchronize with the blockchain is essential.
To achieve a reasonable profit relative to the high costs of Bitcoin mining, you must join a mining pool or establish one yourself. A Bitcoin mining pool refers to a group of multiple miners who share their hash rates and collaborate to mine Bitcoin together.
In the world of cryptocurrencies, the most important tool for storing, sending, and receiving assets is a digital wallet. Digital wallets can be hardware based, software based, or even online, and you need to choose one based on your specific needs.
To set up, configure, and monitor the status of mining devices, a management system is required. Therefore, to control the mining process, monitor device temperatures, track hash rates, connect to mining pools, and generate performance reports, you need a powerful computer system.
To prevent potential hazards such as fires or device malfunctions, as well as to ensure safe and appropriate power distribution to the devices, protection against fluctuations, and enhanced safety for the mining system, standard equipment must be obtained.
From the very beginning of this article, you have probably been wondering where Bitcoin should be mined. In short, the answer is: Bitcoin is not mined from a specific physical location; instead, it is mined within a decentralized network called the blockchain by solving complex mathematical problems using mining devices.
In fact, Bitcoin mining refers to the process of creating new units of this digital currency by solving complex mathematical problems with powerful devices known as miners. This process is carried out by a code defined in the Bitcoin protocol, and each time one of these problems is successfully solved, the network automatically generates a certain amount of new Bitcoin and rewards the miner who solves it first with those Bitcoins.
Therefore, Bitcoins do not exist beforehand; they are created as a result of validating transactions and adding new blocks to the blockchain. Mining can be done anywhere in the world where stable electricity and internet are available and where local laws permit it.
This section provides a step by step guide to Bitcoin mining:
Before taking any action, it is necessary to realistically assess the profitability of mining. This analysis includes calculating electricity costs, initial capital for purchasing equipment, the required hash rate, and estimating potential income based on network difficulty and the current price of Bitcoin. Tools like online mining calculators can be helpful at this stage.
The next step is to acquire the necessary equipment for mining. The most important of these is the mining device (ASIC Miner), which comes in various models and should be selected based on hash rate, power consumption, and efficiency. Additionally, a powerful power supply, proper cooling system, and electrical safety equipment are required. Ensuring the authenticity and condition of the device at this stage is essential.
The installation site for the devices should have adequate ventilation, a controlled temperature, and stable electricity. Bitcoin mining generates significant heat, and without proper temperature management, equipment can be damaged. Additionally, the environment should have secure and controlled access to prevent potential hazards.
Once the infrastructure is in place, power on the device and access its settings via a computer or mobile phone. Typically, you will need to find the device's IP address through specialized software and enter it in your browser. Then, log into the device’s management panel and perform basic settings such as language, date, and updating the internal firmware.
A mining pool is where miners combine their processing power and collaboratively mine blocks. To connect, you need to register in a reputable pool, obtain the Worker information, and enter it into the device’s panel.
Mining is a continuous process and requires ongoing monitoring and management. You should regularly check the device's temperature, hash rate, pool connection stability, and electricity consumption. Any disruption in these areas can lead to reduced efficiency or even equipment damage. Using monitoring apps or alert systems is recommended.
The profit from Bitcoin mining is stored in your mining pool account. At this stage, once the minimum withdrawal amount is reached, you can transfer the mined Bitcoins to your digital wallet. Remember, your digital wallet should be secure and reputable.
Bitcoin Mining Methods:
In this method, the miner attempts to solve blocks alone, without joining any pool. If successful, the miner receives the full reward for the block. However, due to the high difficulty of the Bitcoin network, the chances of success in solo mining are very low.
In this method, miners combine their processing power in a mining pool. If the pool successfully solves a block, the reward is distributed among the members. This method offers lower profits compared to solo mining but provides regular and predictable income.
This method is suitable for individuals who want to mine Bitcoin without owning mining devices. In cloud mining, the person rents a portion of the hashing power from companies offering mining services, without needing to purchase equipment or use electricity. This method is simpler but typically offers lower returns and carries risks such as fraud or lack of contract transparency.
Since early 2019, Bitcoin mining has been officially recognized in Iran, provided operators obtain a license from the Ministry of Industry, Mine and Trade (MIT). This regulation aims to create a legal framework for miners and prevent unauthorized electricity consumption.
Prospective miners must submit a technical-economic feasibility plan, identity documents, and hardware capacity details to their provincial MIT office to secure both establishment and operation permits. Licenses are granted after evaluating grid capacity, physical infrastructure, and environmental compliance.
Use of subsidized or residential electricity for cryptocurrency mining is prohibited. All licensed mining farms are billed at the industrial electricity rate approved by the Ministry of Energy, with no access to discounted or subsidized power.
Importing ASIC miners requires formal registration and MIT approval. All hardware must meet prescribed standards for power consumption, noise levels, and cooling systems. Unauthorized or non-certified equipment may be seized and cause license revocation.
Licensed miners must submit monthly reports on electricity usage and device performance to the MIT. Ministry inspectors conduct regular on-site audits to verify operational compliance; any violations are referred to the relevant enforcement committee.
Mining revenue is subject to corporate income tax and value-added tax. ASIC importers are not eligible for customs exemptions; all duties and taxes are the responsibility of the license holder.
Non-licensed farms or those using non-industrial rates face electricity disconnection, fines up to twice the owed electricity fees, and license cancellation. Unauthorized equipment seizures may result in legal prosecution.
By adhering to this legal framework, Bitcoin miners in Iran can operate transparently and sustainably while contributing to the security of the global network. .
