A Brief History of Bitcoin Mining: From Individual Wealth to Industry Monopoly, How Mining Machines Changed Everything

Do you remember that legendary moment in 2009? Satoshi Nakamoto mined Bitcoin using a regular computer, and the dream of getting rich overnight began. But if you still want to replicate that history today with an old laptop, you’ll probably just waste electricity. The world of Bitcoin mining has completely changed.

The Essence of Mining: The “Bookkeeper” of Blockchain

Simply put, Bitcoin mining is the process where miners solve complex mathematical problems to keep records for the Bitcoin network and earn BTC rewards.

Imagine: transactions are happening on the Bitcoin network every moment, and these transactions need to be recorded, verified, and confirmed. Who does this? Miners. They use mining hardware (specialized equipment) to perform calculations. The first to find the correct answer can add a new block to the blockchain and receive a reward.

This mechanism is called “Proof of Work”(Proof-of-Work, PoW)—the more computational work you contribute, the higher your chances of earning rewards. The “tools” miners use are called mining machines, evolving from initial CPUs to today’s professional ASIC chips. The evolution of mining hardware itself is a history of industry upgrades.

Why Do People Still Mine? Two Main Revenue Sources

Mining remains attractive mainly because it is profitable. Miners’ income mainly comes from two parts:

Block Rewards — Each time a block is successfully recorded, the system automatically rewards a certain amount of BTC. This reward halves approximately every four years (50→25→12.5→6.25→3.125 BTC…), until all 21 million BTC are mined.

Transaction Fees — Every Bitcoin transaction requires a fee paid by the sender, which miners collect. When the network is congested and transaction volume is high, fees can rise significantly. Historically, during the inscription boom, fees accounted for over 50% of miners’ total income.

Besides direct economic gains, miners also maintain the normal operation of the Bitcoin network. Without mining, the entire network would collapse—no one would record transactions, confirmations would halt, and Bitcoin would become meaningless. The profitability drives continuous miner participation, fueling the Bitcoin ecosystem.

Evolution of Mining Hardware: From Living Room to Data Center

The development of mining technology clearly reflects the industry’s commercialization process:

2009-2012: CPU Mining Era
Anyone could mine with their home computer (CPU). Low difficulty, decent returns. This was the golden age for individual miners.

Q1 2013: Rise of GPU Mining
Graphics cards (GPU) offered stronger parallel computing power, starting to replace CPUs. Mining was no longer just a side hobby for idle computers but the beginning of a formal industry.

Q2 2013 to Present: ASIC Mining Era
Specially designed ASIC chips have completely changed the game. Bitcoin mining entered an “arms race” era. From Avalon miners to AntMiner S series, and the latest high-end models, these devices have increasing hash power and costs (usually starting from $1,000–$2,000).

Parallel evolution of mining forms:

Early on, solo mining—miners worked alone, keeping all BTC they mined. But as total network hash rate skyrocketed, individual success probability plummeted.

Later, pool mining emerged—miners combine their equipment and share rewards proportionally. Well-known pools like F2Pool, Poolin, BTC.com, AntPool emerged, controlling most of the global hash rate.

There’s also cloud mining—users rent hash power from others, avoiding the purchase of expensive hardware, but with generally lower returns.

Current State of Mining: The Game of Big Capital

By 2025, the Bitcoin mining ecosystem has been thoroughly transformed:

Total network hash rate exceeds 580 EH/s (exahashes per second). What does this mean? Mining with a regular home computer for a lifetime won’t earn a single Bitcoin. Individual miners are no longer competitive.

Mining hardware updates rapidly. High-end models from last year are now considered “old equipment.” Insufficient hash power leads to significantly lower profits. Miners must continually invest in new hardware or face elimination.

Mining is increasingly concentrated in large-scale farms. Companies with capital, energy advantages, and operational teams dominate most of the hash rate. Small miners, even in pools, often cannot cover electricity costs and hardware depreciation.

How Much Does It Cost to Mine One Bitcoin?

This is the most concern for miners. As of 2025, the average cost to mine one Bitcoin is approximately $108,256.62.

This includes:

• Hardware purchase costs
• Electricity consumption (usually the biggest expense)
• Cooling systems (mining generates a lot of heat)
• Venue rental, network maintenance, daily operational expenses
• Pool fees

Among these, electricity costs are most sensitive. In regions with cheap power (Iceland, Middle East, areas with abundant hydroelectricity), mining profits are relatively higher. In cities with expensive electricity, profitability is nearly impossible.

How Much Can Miners Earn? Profitability Equation

A miner’s actual profit depends on multiple variables:

1. Hash rate of the mining machine — The higher the hash rate, the larger the share of the pool’s rewards.

2. Current Bitcoin price — If BTC price drops, even mining more coins may result in losses.

3. Network difficulty — As total hash rate increases, mining difficulty rises, reducing individual miners’ chances.

4. Local electricity costs — Directly impact operational profit.

Profit = ((Miner Hash Rate / Total Network Hash Rate) × Block Reward − Electricity Cost − Other Expenses)

This formula looks simple but involves many variables, making profit prediction very challenging. Online calculators like CryptoCompare, Nicehash can help estimate based on your parameters, but results are only indicative.

Impact of Bitcoin Halving: The “Black Swan” for Miners

In April 2024, Bitcoin completed its fourth halving, reducing the block reward from 6.25 BTC to 3.125 BTC. This has a huge impact on the mining industry:

Rewards are cut in half, income drops accordingly
If Bitcoin price doesn’t double simultaneously, miners’ actual earnings will decrease significantly. Many low-efficiency, high-cost farms may become unprofitable.

“Surrender wave” phenomenon
Some miners with high electricity costs or outdated hardware are forced offline, causing a short-term drop in total network hash rate. But this is temporary; as hash rate declines, difficulty adjusts downward, and more efficient miners will fill the gap.

Transaction fees become more important
With block rewards halved, miners rely more on transaction fees to sustain income. This explains why on-chain activity (like inscriptions, Layer 2 transactions) positively influences miners’ revenue.

Miners’ strategies:

1. Upgrade to latest high-efficiency hardware — Reduce power consumption per TH, improve profitability.

2. Move to regions with low electricity costs — Find areas rich in hydro, with friendly policies, and cheap power to set up farms.

3. Mine multiple cryptocurrencies — Some pools support automatic algorithm switching, allowing miners to switch between Bitcoin, Dogecoin, etc., based on profitability.

4. Hedging — Use futures contracts to lock in Bitcoin prices, protecting against price drops.

Can Individuals Still Participate in Mining? Practical Advice

If you want to start mining, first understand: Today’s Bitcoin mining is not a get-rich-quick scheme but an industry requiring careful investment and yield management.

Step 1: Confirm legal compliance
Mining is energy-intensive; some regions have bans or restrictions. Check local policies before starting.

Step 2: Assess your conditions

If you plan to mine yourself (buy hardware):

• Require substantial initial capital (at least a few thousand dollars)
• Need stable, cheap electricity
• Basic knowledge of hardware maintenance
• Space for equipment (noise and heat considerations)

Popular mining hardware includes AntMiner S19 Pro, WhatsMiner M30S++, AvalonMiner 1246, each with different performance and costs.

Step 3: Choose participation method

Option A: Buy and operate your own hardware
Advantages: Full control, no reliance on third parties
Disadvantages: High upfront costs, technical complexity, concentrated risk

Option B: Use hosting services
Advantages: Outsource maintenance, benefit from economies of scale
Disadvantages: Hosting fees, trust issues

Option C: Cloud mining
Advantages: Low entry barrier, no hardware needed
Disadvantages: Lower returns, scams, platform risks

If choosing cloud mining, select reputable platforms; beware of promises of high returns.

Due Diligence Before Mining

Cost assessment

• Calculate the actual cost to mine one Bitcoin (consider local electricity rates)
• Compare with current Bitcoin price to estimate profit margins
• Consider hardware depreciation, potential electricity price increases

Market timing

• Post-halving periods often have a “pain period” with lower costs
• But watch for prolonged bear markets

Risk awareness

• Mining yields are affected by many factors, with uncertainties
• Hardware may become obsolete
• Policy and electricity costs can change unexpectedly

Summary: Mining Is Still an Industry, Not a Shortcut

Bitcoin mining has evolved from a fringe hobby into a formalized industry. The era of “free Bitcoin” with home computers is gone.

Today’s mining reality is:

• High barriers to entry (large capital, expertise)
• Dominated by large farms
• Profitability uncertain (dependent on many uncontrollable variables)
• Policy risks vary across regions

For ordinary investors, directly buying or trading Bitcoin on exchanges is more efficient and less risky than “mining” yourself. Unless you have the following conditions: access to cheap electricity, mining experience, sufficient capital, and ability to withstand long-term uncertainty, it’s generally not recommended to enter mining.

The allure of mining remains, but it’s no longer a personal game.