What Is Cryptocurrency Mining? How Bitcoin Miners Earn,…

Search interest in "what is cryptocurrency mining" jumped this week after Mexican investigators went public with another suspected illegal mining farm running on stolen electricity. The question behind the searches is simple: how does a warehouse full of computers turn power into money, and why does that attract both investors and prosecutors? This guide answers it with today's network numbers rather than textbook examples.

Key facts, all sourced

• Block subsidy: 3.125 BTC per block since the April 2024 halving at block 840,000; it halves every 210,000 blocks (Bitcoin protocol issuance schedule; blockchain.info returns 3.125 on 15 September 2026).
• Bitcoin spot $77,012 - CoinGecko, 13:12 UTC 15 September 2026. Blockchair's market price at the same time: $77,020.
• Block height 967,127, difficulty 127.45 trillion, 24-hour estimated hashrate about 1,003 EH/s - Blockchair network stats, 13:12 UTC 15 September 2026.
• Next difficulty adjustment: Blockchair estimates about +3.6%, expected around 19 September 2026. 158 blocks were found in the prior 24 hours versus a 144-block target, which is what pushes difficulty up.
• Top-end hardware: Bitmain's Antminer S21 XP is rated at 270 TH/s for 3,645 W, or 13.5 J/TH (manufacturer specifications as listed by ASIC Miner Value).
• US tax: mined coins are gross income at their fair market value on the date received, and mining run as a business is subject to self-employment tax - IRS Notice 2014-21.

What cryptocurrency mining actually is

A blockchain like Bitcoin has no central operator deciding which transactions are valid. Instead, thousands of independent machines compete to bundle pending transactions into the next block. To win the right to add that block, a miner has to find a number that, when combined with the block's data and run through the SHA-256 hash function, produces a result below a target set by the network. There is no shortcut to finding it. Miners change a field called the nonce and hash again, trillions of times per second, until someone gets lucky. We explain that field in detail in our guide to the nonce in crypto.

This system is called proof of work. The "work" is the electricity burned on those guesses, and it is what makes the ledger expensive to rewrite: an attacker would need to out-compute the rest of the network. The winning miner broadcasts the block, other nodes check it in milliseconds, and the miner is paid. Separately, transactions themselves are authorised by digital signatures, not by miners - see our explainer on ECDSA and Bitcoin signatures.

Not every cryptocurrency is mined. Ethereum stopped mining and moved to proof of stake on 15 September 2022 - four years ago today - so ether is now secured by validators who lock up coins rather than burn electricity. Bitcoin remains the largest proof-of-work network by far.

How Bitcoin miners earn

Miners are paid in two ways:

• The block subsidy. Newly created bitcoin, fixed by the protocol. It started at 50 BTC in 2009 and has halved four times; it is 3.125 BTC today. By the issuance schedule, roughly 20.08 million of the 21 million coins that will ever exist have been issued as of block 967,127.
• Transaction fees. Users attach fees to get their transactions included. Fees rise when blocks are congested and fall back when demand is quiet, so they are the variable part of a miner's income.

The network aims for one block every 10 minutes, or 144 a day. At today's numbers that is 450 BTC a day in subsidy alone, worth about $34.7 million at $77,012. That pool is split across every machine on the network in proportion to its share of total hashrate. Because 1,003 EH/s of competing hashpower is chasing it, the useful unit is revenue per unit of hashrate, which the industry calls hashprice.

Using the Blockchair hashrate estimate and the CoinGecko price above, subsidy-only hashprice works out to about $34.57 per PH/s per day (FinanceFeeds calculation; fees would add a little on top, and the 24-hour hashrate estimate is noisy). For context, in April 2026 Luxor's Hashrate Forward Market was pricing an average of $36.63 per PH/s per day for the following six months, according to Hashrate Index.

Every 2,016 blocks, roughly every two weeks, the network resets difficulty so blocks keep arriving every 10 minutes on average. When more machines switch on, difficulty rises and each machine's share of the reward shrinks. That is why a miner's income can fall even when the bitcoin price holds still.

What it costs: the electricity maths

A mining machine is a specialised chip called an ASIC that can do nothing except compute SHA-256 hashes. Its economics come down to three numbers: hashrate, power draw and the price paid for electricity. Take the Antminer S21 XP at 270 TH/s and 3,645 W. At a hashprice of $34.57 per PH/s per day it earns about $9.33 a day before fees, and it burns 87.5 kWh a day.

FinanceFeeds calculation from the manufacturer's rated 270 TH/s and 3,645 W, bitcoin at $77,012 and Blockchair's 1,003 EH/s hashrate estimate on 15 September 2026. Excludes transaction fees, pool fees, cooling, hosting, hardware cost and depreciation. A difficulty rise or a lower bitcoin price moves every revenue figure down.

The margin column is before the machine has paid for itself, so the real hurdle is higher than the table shows. It also explains why the industry has concentrated around cheap, often stranded or curtailed power, and why some large listed miners are now redirecting that power to AI data centres instead. IREN is the clearest example: its mining revenue fell 40% in its latest quarter as it switched rigs off for GPUs, as we covered in our IREN results analysis.

Mining pools and home mining

A single machine has a tiny share of a 1,003 EH/s network. The S21 XP's 270 TH/s is about 0.00003% of it, so mining alone it could wait decades for a block. That is why most hashpower is pointed at mining pools: many miners combine their hashrate, the pool finds blocks far more regularly and pays each participant a share of the rewards minus a fee. The payout becomes a small, steady income stream instead of a lottery ticket.

Home mining of bitcoin on a laptop, phone or gaming GPU does not compete with ASICs. Some other proof-of-work coins can still be mined on GPUs, but the same electricity arithmetic applies, and "mining" apps that promise returns without hardware are a recurring scam format. If an app pays you for "mining" on a phone, the money is not coming from proof of work.

Why regulators watch it

Mining turns electricity directly into a liquid, portable asset, and that creates three kinds of regulatory attention:

• Energy and grids. Mining load is large and flexible, which can help grids absorb surplus power but also competes with households and data centres for capacity. The Cambridge Centre for Alternative Finance publishes the Cambridge Bitcoin Electricity Consumption Index with a central estimate and lower and upper bounds, because the true hardware mix cannot be observed directly; alternative trackers such as Digiconomist produce higher figures.
• Bans and relocation. China's 2021 crackdown pushed a large share of global hashrate to other countries, and several jurisdictions have since restricted mining over power shortages.
• Crime. Stolen power makes mining almost pure profit. In Puebla's Sierra Norte, Mexican federal investigators found 300 graphics processing units, 80 medium-voltage terminals and 8 satellite antennas in a remote building suspected of money laundering and electricity theft - the fourth suspected facility in the area since early 2025, as reported in our coverage of the Mexico mining farm case.

Tax authorities are the fourth audience. In the US, the IRS treats mined coins as income at fair market value when received, and selling them later creates a separate capital gain or loss on any change in value. Other countries differ, so miners outside the US need local advice.

What changes next: the 2028 halving

The subsidy halves again at block 1,050,000, to 1.5625 BTC. That is 82,873 blocks after today's height; at an exact 10-minute pace it would land around 12 April 2028, and blocks have recently been arriving faster than that, which would bring it earlier. Halvings cut every miner's subsidy income by half overnight. Unless the bitcoin price or fees make up the difference, the least efficient machines switch off, difficulty falls, and the survivors earn a larger share. That cycle, more than any single price move, is what shapes the mining industry.

Frequently asked questions

What is cryptocurrency mining in simple terms?

It is the process of using computers to validate transactions and add new blocks to a proof-of-work blockchain. Miners race to solve a hashing puzzle; the winner adds the block and receives newly issued coins plus transaction fees. On Bitcoin that reward is currently 3.125 BTC per block plus fees.

How much does a Bitcoin miner earn per block?

The subsidy is 3.125 BTC, worth about $240,660 at $77,012 (CoinGecko, 13:12 UTC, 15 September 2026), plus whatever fees the transactions in that block paid. Most miners earn a share of pool rewards rather than whole blocks.

Is crypto mining still profitable in 2026?

It depends almost entirely on electricity price and hardware efficiency. On 15 September 2026 figures, an Antminer S21 XP earns about $9.33 a day before fees and covers its power only below roughly 10.7 cents per kWh, before hardware, cooling and pool costs. Large operators on cheap power can profit; most retail electricity tariffs cannot.

Can I mine cryptocurrency on my laptop or phone?

Not profitably for bitcoin. Laptops, phones and gaming GPUs cannot compete with specialised ASIC machines on a network running about 1,003 EH/s. Apps that claim to "mine" on a phone and pay returns should be treated with suspicion.

Is cryptocurrency mining legal?

In most countries yes, but some have banned or restricted it, China most prominently in 2021. Where it is legal it is still subject to electricity, tax and anti-money-laundering rules, and running miners on stolen power is a crime, as the Mexico investigations show.

Is mined crypto taxed?

In the US, yes. IRS Notice 2014-21 says miners must include the fair market value of mined coins in gross income on the date received, and mining carried on as a business is subject to self-employment tax. Selling the coins later triggers a separate capital gain or loss.

When is the next Bitcoin halving?

At block 1,050,000, when the subsidy falls to 1.5625 BTC. From block 967,127 on 15 September 2026 that is 82,873 blocks away - around April 2028 at the 10-minute target pace, and possibly earlier if blocks keep arriving faster.

Educational content, not investment or tax advice. Digital assets are volatile and you may lose your capital; mining hardware can lose value quickly as difficulty rises. Network data, price and hardware figures verified 15 September 2026; profitability figures are FinanceFeeds calculations and change with every block.