Bitcoin Mining Explained: The Digital Gold Rush of the 21st Century

In the age of invisible money, Bitcoin remains the most visible of digital assets. It was the first cryptocurrency to challenge traditional finance and continues to dominate the conversation around digital wealth. But few people understand where Bitcoin actually comes from, or why there will only ever be 21 million of them.

To understand that, you need to look at mining – the digital process that fuels Bitcoin’s existence.

What is bitcoin mining?

Mining sounds industrial, but in Bitcoin’s world it means solving complex mathematical puzzles using computers. Each time miners verify a batch of transactions on the Bitcoin network, known as a block, they compete to find a special code – a hash – that fits the network’s strict criteria. The first to solve it wins the right to add the block to the blockchain and earns a reward: newly created Bitcoin plus transaction fees.

In simpler terms, miners are the accountants of Bitcoin’s decentralised system. They confirm that each transaction is valid, keep the ledger accurate, and make sure no one spends the same coin twice. Their reward is the digital currency they help maintain.

This process – called proof-of-work – underpins Bitcoin’s integrity. It’s what allows a global network of computers to agree on who owns what, without a central bank or government.

The 21-million coin limit

When Bitcoin was launched in 2009, its creator – the mysterious Satoshi Nakamoto – built a ceiling into the system: only 21 million bitcoins will ever exist. That cap is hard-coded into Bitcoin’s software, and it’s what gives the currency its scarcity. Unlike traditional currencies, which can be printed endlessly, Bitcoin is more like a finite natural resource. New coins are released through mining, but at a decreasing rate. Every 210,000 blocks – roughly every four years — the reward that miners receive is cut in half. This event, known as a halving, ensures that new supply slows over time

In 2009, miners earned 50 bitcoins per block. In 2024, after the most recent halving, they receive just 3.125. By around the year 2140, the last fraction of a Bitcoin will be mined, and miners will then earn only transaction fees for maintaining the network.

The halving process is what keeps Bitcoin deflationary – and why some investors compare it to gold. Each halving makes the asset scarcer, and historically, each has been followed by strong price rallies. But scarcity also makes mining more competitive.

How mining actually works

Mining uses the SHA-256 algorithm – a cryptographic function that turns any data into a 64-character string of numbers and letters. Every new block’s data is combined with the previous block’s hash, creating an unbreakable chain.

Miners compete to find a hash below a network-set target. Because the hash is random, this takes trillions of guesses per second. The first miner to find a valid hash broadcasts it to the network, which verifies it, adds the block to the chain, and distributes the reward.

To stay competitive, miners use powerful, specialised hardware called ASICs (Application-Specific Integrated Circuits). These machines are designed solely for mining Bitcoin, performing one task incredibly well – calculating hashes at lightning speed. Modern mining rigs can make hundreds of trillions of calculations per second.

The catch? Power. Mining consumes enormous amounts of electricity. Running an ASIC farm 24/7 isn’t cheap – and energy costs can make or break profitability.

The global mining race

In Bitcoin’s early days, anyone could mine with a standard computer. Today, the difficulty level has skyrocketed. Mining has become industrialised – dominated by large data-centre-like operations and mining pools that combine resources to increase the odds of success.

Globally, the biggest players include Marathon Digital, Riot Platforms, CleanSpark, and Bitfarms in North America. But Australia also plays a role.

Sydney-founded Iris Energy operates major facilities in British Columbia, powered entirely by renewable hydropower. Another Australian-linked miner, Mawson Infrastructure Group, runs operations in Pennsylvania and Georgia, combining efficient data infrastructure with clean-energy ambitions.

Together, such companies form the backbone of Bitcoin’s computational power – or hashrate. As of late 2025, the Bitcoin network was processing over one zettahash per second (that’s one followed by 21 zeros). It’s the largest distributed computing network on Earth.

Why energy use matters

Bitcoin’s energy consumption is one of its most controversial features. Proof-of-work mining uses as much electricity as some small countries. Critics say it’s unsustainable in a world trying to cut carbon emissions. Supporters argue that mining can help stabilise renewable energy grids by consuming excess or stranded power.

Many modern miners, including Iris Energy and HIVE Digital, now focus on renewable energy sources such as hydro, wind, and solar. Others repurpose wasted energy from oil and gas operations – turning methane flares into mining power.

Despite these innovations, the environmental debate continues. For Bitcoin to maintain legitimacy as “digital gold,” its mining must evolve to become greener and more efficient.

The economics of mining

Mining is part mathematics, part economics. To profit, the value of the bitcoins you earn must exceed your operational costs – mainly hardware and electricity.

A small-scale miner running a single rig might earn only a few dollars a day after power costs. Large operations, by contrast, spend millions on equipment and energy but benefit from scale and efficiency.

Most miners join pools, combining computing power and sharing rewards proportionally. Major global pools include FoundryUSA, AntPool, and ViaBTC — together controlling more than 60% of the world’s hashrate.

The Bitcoin network automatically adjusts difficulty every two weeks, depending on how many miners are active. If more miners join, blocks are found faster, and the network raises the difficulty to keep block times near ten minutes. If miners drop off, it becomes easier.

This built-in adjustment keeps Bitcoin’s rhythm steady, no matter how much computing power the network gains or loses.

What happens when all 21 million are mined?

Eventually, the mining reward will drop to zero. But Bitcoin won’t stop. Once all 21 million coins exist, miners will earn only transaction fees – paid by users sending Bitcoin.

In theory, this transition keeps the network sustainable. As long as Bitcoin has value and people transact with it, miners will be incentivised to keep validating blocks.

By that stage, however, mining will likely look nothing like it does today. Efficiency will improve; hardware will evolve; and new, cleaner energy sources will likely dominate. Some experts predict that transaction fees alone will sustain the network – others warn that fewer rewards could threaten security if miners lose motivation.

Either way, Bitcoin’s fixed limit is part of what gives it mystique — a form of digital scarcity no government can replicate.

Can everyday Australians still mine bitcoin?

Technically, yes – but realistically, it’s difficult. The days of mining profitably with a home computer are long gone. ASIC miners cost thousands of dollars, and electricity in Australia is relatively expensive compared to mining hubs in North America or Central Asia.

For those still curious, joining a mining pool is the simplest entry point. Pools distribute work among thousands of participants and split the rewards. But even then, returns are small unless Bitcoin’s price rises significantly or electricity costs fall. A more practical way to gain exposure is through mining-related stocks like Iris Energy (NASDAQ: IREN) or CleanSpark (NASDAQ: CLSK), or via exchange-traded funds (ETFs) that track these companies’ performance.

Security and scams

Wherever there’s money, there are scams – and crypto mining is no exception. Beware of:
• Cloud mining platforms promising guaranteed returns. Many are fraudulent.
• Fake wallets designed to steal your private keys.
• Phishing exchanges that impersonate legitimate sites.

The golden rule of crypto applies here: if it sounds too good to be true, it probably is. Never share your wallet password or recovery phrase — once lost or stolen, your Bitcoin is gone forever. There’s no “reset password” in decentralised finance.

Bitcoin’s future: between scarcity and scale

Bitcoin’s design is elegant: a self-regulating system that rewards trust through mathematics. But it also faces challenges – from scalability to sustainability. The network currently processes around five transactions per second, compared to Visa’s 65,000. Efforts like the Lightning Network aim to fix this by handling transactions off-chain, but mainstream adoption remains gradual.

Still, the fundamental idea – that digital money can exist without central control – continues to attract miners, developers, and investors alike.

As of 2025, around 19.7 million bitcoins have already been mined. Less than two million remain to be created over the next century. The race is nearly run – but the infrastructure, innovation, and ideology surrounding Bitcoin are only just beginning.

In a sense, Bitcoin mining is more than a way to earn cryptocurrency. It’s a global experiment in decentralised economics – part competition, part cooperation, and entirely unlike anything in human history.

And while the tools may change – from dusty server rooms to solar-powered data farms – the principle remains the same: to unlock digital scarcity, one hash at a time.