Technical and economic guide. Updated February 15, 2026.
Bitcoin mining is the industry that produces blocks and ensures network security through Proof of Work. It is a billion-dollar industry with thin margins, sensitive to the price of energy and the price of BTC. Understanding how mining works is useful not only for those who want to mine, but for anyone who wants to understand the security economics of Bitcoin.
How Proof of Work works
Producing a valid Bitcoin block requires finding a number (nonce) such that, combined with the block data, produces a SHA-256 hash less than a target value. There is no mathematical way to find this nonce: you have to try them one by one, billions per second. The miner who finds it first includes the block in the chain and collects the reward.
Hashrate: the measure of computational power
Hashrate is the number of hashes per second produced by a miner or the entire network. It is measured in TH/s (terahash, 10¹²) for individual ASICs, and in EH/s (exahash, 10¹⁸) for the global network. As of February 2026, the total hashrate of the Bitcoin network is around 700-800 EH/s, the highest level in history.
A growing hashrate indicates: new miners joining, attractive profitability, confidence in the long-term protocol. A decreasing hashrate indicates: miners leaving due to low profitability or macroeconomic events (ban, price collapse).
Difficulty adjustment: self-regulation of the network
Bitcoin adjusts the target (and therefore the difficulty of finding a valid block) every 2016 blocks — about 2 weeks — to keep the average time between blocks at 10 minutes. If blocks are found faster (increasing hashrate), the difficulty goes up. If more slowly (hashrate decreasing, as after the Chinese ban in 2021), the difficulty drops.
This mechanism is crucial: it ensures that the average block time remains stable regardless of how much computational power enters or leaves the network. It is one of the most elegant mechanisms in Bitcoin’s design.
The economics of mining
Mining is an industrial activity with precise fixed and variable costs. Understanding the economy helps interpret market movements and the decisions of large miners.
Revenue: block reward + fee
A miner’s revenue comes from two sources: the block rewards (6.25 BTC per block until the April 2024 halving, then 3,125 BTC) and the transaction fees included in the block. Under normal conditions, fees represent 5-15% of total revenue; in periods of high congestion (such as during the 2023 enrollment mania) they can exceed 50%.
Costs: energy, ASIC and overhead
Energy it is the dominant cost: it typically represents 70-80% of the total operating costs of a mining farm. Industrial miners negotiate long-term electricity supply contracts at low prices — $0.02-0.05/kWh is the target range for competitive operations. At $0.07/kWh a modern miner (Antminer S21, ~20 J/TH) is borderline profitable in low BTC price periods.
Hardware (ASIC): the latest generation ASICs (Bitmain Antminer S21 Pro, MicroBT Whatsminer M60) cost $5,000-15,000 per unit and have a useful life of 3-5 years. The depreciation cost significantly affects break-even.
Overhead: facility (data center or shipping container), cooling, maintenance, personnel. It varies enormously between operations in different countries.
Hashprice: the mining KPI
The hashprice is the daily revenue per TH/s of hashrate. It is the most used KPI in the industry because it normalizes the revenue per unit of computational power, allowing comparisons between different ASICs and over time. It is calculated: (block reward + fee) × BTC price / total network hashrate. As of February 2026, with BTC at ~$95,000 and hashrate at 750 EH/s, the hashprice is around $50-60/PH/s/day.
The halving: mechanism and economic impact
Every 210,000 blocks – approximately 4 years – the block reward is halved. It is programmed into the Bitcoin code and cannot be changed without a consensus change. The mechanism reduces the issuance of new BTC over time, tending to zero around 2140.
History of halvings
| Date | Block | Reward first | Rewards later | BTC price (±30 days) |
|---|---|---|---|---|
| Nov 2012 | 210.000 | 50 BTC | 25 BTC | $12 → $1,200 (12m later) |
| Jul 2016 | 420.000 | 25 BTC | 12.5 BTC | $650 → $20,000 (18m later) |
| May 2020 | 630.000 | 12.5 BTC | 6.25 BTC | $8,700 → $69,000 (18m later) |
| Apr 2024 | 840.000 | 6.25 BTC | 3,125 BTC | $63,000 → ~$100,000+ (9m later) |
The historical post-halving rally pattern is documented but not guaranteed. The underlying mechanism — reduction of new supply with unchanged or growing demand — is economically rational. But each cycle has different variables (institutional adoption, regulation, global macro) that influence the timing and magnitude of the movement.
The long-term security debate
With each halving, the revenue from block rewards decreases. In the long term (after 2140, when there will no longer be any new BTC), network security will have to be supported entirely by transaction fees. The debate is open: will transaction volume and fees grow enough to compensate? Layer 2 (Lightning) that move volume off-chain reduce the on-chain fees available to miners. This is one of the most important open questions in Bitcoin’s design.
Mining in 2026: concentration and regulation
Bitcoin mining is a highly concentrated industry today. The large pools (Foundry USA, Antpool, ViaBTC, F2Pool) control the majority of the global hashrate. This concentration doesn’t directly threaten the security of the protocol — a pool that mined invalid blocks would simply lose the reward — but it raises questions about transaction censorship at the pool level.
Geographically, the US became the country with the highest hashrate after the 2021 Chinese ban (which temporarily eliminated 50% of the global hashrate). Texas, Kentucky and Georgia are the regions with the greatest concentration, attracted by cheap energy and the availability of industrial land.
Mining pools: how they work and how to choose
Finding a Bitcoin block alone requires an amount of hashrate that the vast majority of miners don’t have. The probability of finding a block with 100 TH/s hashrate (a single modern ASIC) is about 1 in 7.5 million per block — that is, a block is found on average every 145 years. This is why mining pools exist: they aggregate the hashrate of thousands of miners, find blocks more frequently, and distribute the reward in proportion to the hashrate contributed.
Payment Schemes: PPLNS vs PPS
PPLNS (Pay Per Last N Shares): the reward depends on the number of “shares” (sub-threshold work tests) you have contributed in the last N total shares of the pool. It varies with the luck of the pool — if the pool finds many blocks in a period, you earn more. The variance is higher but there is no pool spread.
PPS (Pay Per Share): you receive a fixed payment for each share accepted, regardless of whether the pool finds a block or not. The pool assumes the risk of variance. In exchange, the pool retains a higher fee (typically 2-4% vs 1-2% of PPLNS). PPS is preferable for miners who want predictable cash flow.
Main pools in 2026
| Pool | Hashrate quota | Scheme | Fee |
|---|---|---|---|
| Foundry USA | ~28% | FPPS | 0%* |
| AntPool (Bitmain) | ~25% | PPS+ | 2.5% |
| ViaBTC | ~12% | PPS+/PPLNS | 4% / 2% |
| F2Pool | ~10% | PPS+ | 2.5% |
| Ocean Pool | ~3% | TIDES | 0%* |
*Foundry and Ocean use alternative models where fees are integrated differently. Ocean is notable because it uses the Stratum v2 protocol and allows miners to choose which transactions to include in blocks — a step toward greater decentralization of transaction selection.
Domestic vs industrial mining: the economic analysis
Home mining — a single ASIC in the home — is still possible in 2026, but economically much more challenging than industrial mining. The analysis is simple:
The problem of domestic energy
An Antminer S21 Pro consumes approximately 3.5 kW. In Italy, domestic energy costs on average €0.25-0.35/kWh. At €0.30/kWh the daily energy cost is: 3.5 × 24 × 0.30 = €25.20/day. At the current hashprice of ~$55/PH/s/day with 0.000216 PH/s per ASIC, the daily revenue is approximately $0.012 per PH/s × 0.000216 × 1000 = $2.59 — much less than the €25 in energy costs.
The calculation changes completely if you have cheap energy: excess solar panels, a private hydroelectric source, or industrial energy at €0.05/kWh. Many enthusiastic miners use excess PV production during peak hours — in this scenario the cost of energy tends to zero for several hours a day.
Advantages of mining as a direct purchase of BTC
An often overlooked topic is that mining can be seen as a mechanism for purchasing BTC with different characteristics than purchasing on the market. The mined BTC creates no KYC trace (if paid in BTC directly from the pool), can be tax depreciated as a business asset, and the average acquisition cost follows operating costs instead of the market price. For those who want long-term accumulation with a real business behind it, small-scale mining can make sense despite tight margins.
The energy debate and the sector’s response
The energy consumption of Bitcoin mining is estimated between 130 and 170 TWh per year (February 2026), approximately 0.6% of global electricity consumption. The sustainability debate is complex and often unhelpfully polarized.
The facts: An increasing percentage of mining’s energy mix comes from renewable sources — estimates vary, but credible ranges are 50-70% depending on methodology and time. Industrial miners are very flexible buyers of last resort (they can shut down immediately in case of grid congestion), making them complementary to intermittent sources like solar and wind.
The narrative of mining as pure environmental destruction is empirically inaccurate. That of mining as entirely green is equally exaggerated. The reality is more nuanced and varies greatly by operation and jurisdiction.
Investing in mining: mining company shares vs direct hardware
Those who want exposure to the mining sector without physically managing hardware have two main options: buy listed mining company shares or buy hashrate directly (cloud mining or physical hardware).
Mining company shares
Marathon Digital Holdings (MARA), Riot Platforms (RIOT), CleanSpark (CLSK) and Cipher Mining (CIFR) are among the main mining companies listed in the US. These stocks offer mining exposure with the liquidity of a traditional stock market and the ability to hold them in retirement accounts or tax-efficient vehicles (where permitted).
The trade-off versus direct BTC: Mining companies typically trade at a multiple of NAV (Net Asset Value) in bull markets — a premium that reflects growth expectations and operating leverage. In bear markets, they deal at a significant discount. The result is that mining companies amplify BTC movements: they rise more in bull markets, they fall more in bear markets. They are not a replacement for BTC — they are a leveraged bet on the mining sector.
Cloud mining: promises and limitations
Cloud mining — paying a company to manage hardware on your behalf — has a problematic history in crypto. Most cloud mining services have been unprofitable for customers or, in the worst cases, fraudulent schemes. Before considering cloud mining, check: Does the company show verifiable evidence of existing hardware? Are the contracts profitable at current fees with conservative hashprice? Who are the founders and do they have verifiable reputation in the industry?
Exceptions exist — Hive Digital, Luxor and other real-world providers offer contractual hashrate with verifiable terms. But they require thorough due diligence and are generally less efficient than purchasing hardware directly if you have the ability to handle it.
Hashrate as an asset: mining derivatives
In recent years, markets for hashrate derivatives have emerged — tools that allow you to speculate or hedge the hashprice without managing hardware. Luxor Technologies offers hashprice futures: miners can sell future hashrate at a fixed price (hedging), while speculators can buy exposure to the hashprice. It is a relatively nascent market with limited liquidity as of February 2026, but represents an important maturation of the mining infrastructure as an asset class.
Pool mining vs solitary mining: which one to choose
The choice between pool mining and solo mining is one of the key decisions for anyone starting a Bitcoin mining business. Solo mining means that all of the block reward (3,125 BTC post-halving 2024) goes to the miner who finds the block, but with a single ASIC the probability of finding a block in a reasonable time is statistically close to zero. With an Antminer S21 at 200 TH/s against a network hashrate of 700 EH/s, the probability of finding a block each day is approximately 1 in 3.5 million.
Pool mining distributes this probability: each miner contributes hashrate and receives a proportional share of the reward each time the pool finds a block. Major pools such as Foundry USA, AntPool, and F2Pool collectively process over 60% of Bitcoin blocks.
The practical conclusion is simple: below 10 PH/s personal hashrate, pool mining is the only rational option. Solo mining is only justifiable for large operators with hundreds of thousands of ASICs.
Conclusion
Bitcoin mining is a competitive industry with margins that depend on the price of energy, the price of BTC and the efficiency of ASICs. For those who want to invest in the sector (directly or through listed mining company shares), understanding the relationship between hashprice, energy cost and halving schedule is essential. For those who don’t want to mine, understanding mining helps interpret the health and security of the Bitcoin network.
Related reading: Bitcoin Market Cycles: The Complete Guide to Every Phase · On-chain analysis: a guide to understanding the crypto market.
