Bitcoin Mining 101

What is Bitcoin mining, really?

Bitcoin mining is the process by which new transactions are verified and added to the Bitcoin blockchain, and new bitcoins are issued into circulation. It is not "mining" in any physical sense — it is a computational competition.

Specialized computers called ASICs (Application-Specific Integrated Circuits) race to solve a cryptographic puzzle. The first machine to find a valid solution wins the right to add the next block of transactions to the blockchain and is rewarded with newly issued bitcoin plus the transaction fees from that block.

This process repeats approximately every 10 minutes, 24 hours a day, forever. It is the foundation of Bitcoin's security and its monetary issuance.

How do miners earn Bitcoin?

A miner's revenue comes from two sources:

• Block subsidy — the newly issued BTC rewarded for solving the block. As of November 2026, this is 3.125 BTC per block, following the April 2024 halving.
• Transaction fees — Bitcoin users pay fees to prioritize their transactions, and the miner who solves the block collects all fees in that block.

A miner's share of total block rewards is proportional to their share of the global hashrate — the total computational power pointed at the network. If a miner controls 1% of global hashrate, they will on average earn 1% of all block rewards over time.

The critical variable: hashprice

Mining economics come down to a single metric: hashprice — the daily USD revenue earned per unit of computational work (typically per terahash per second, or TH/s).

Hashprice is determined by three things:

• Bitcoin price — higher BTC price means each mined coin is worth more
• Network difficulty — the automatic adjustment mechanism that targets 10-minute blocks. More miners means higher difficulty and lower per-machine output
• Block rewards — halvings cut this in half every four years

When Bitcoin rises, hashprice typically rises with it (good for miners). When new miners come online, difficulty rises and hashprice falls (bad for existing miners). When the halving hits, hashprice is cut roughly in half overnight.

Energy cost: the single most important variable

A miner's profitability depends on the gap between hashprice (revenue per TH/s) and their total operating cost per TH/s. The dominant cost is electricity.

Industrial mining operations today typically pay between $0.03 and $0.08 per kWh. At $0.05/kWh, the cost to produce 1 BTC varies between roughly $25,000 and $60,000 depending on machine efficiency and difficulty. At $0.10/kWh, that same BTC might cost $70,000-$100,000 to produce.

This is why serious miners obsess over power cost. A 2¢ difference in per-kWh electricity can be the difference between a profitable operation and a losing one. It is why mining operations locate near stranded hydroelectric power, flared natural gas, or curtailed grid energy.

Hardware: ASICs and efficiency

Modern Bitcoin ASICs are purpose-built for one computation: SHA-256. The leading machines as of late 2026 — Bitmain's S21 XP Hydro, MicroBT's M66S, and similar — achieve around 11-14 watts per terahash of computation (W/TH).

More efficient machines produce more BTC per dollar of electricity. A fleet running at 12 W/TH generates roughly 15-20% more profit than a fleet running at 15 W/TH, all else equal.

Hydro-cooled machines — where the ASICs are cooled by circulating water rather than air — typically run at better efficiency (lower W/TH) and have longer effective operating lives than air-cooled equivalents. They also command resale premiums in the secondary market.

The mining lifecycle

An institutional mining operation typically involves:

• Procurement — purchasing ASICs direct from manufacturers or via secondary market, typically with lead times of 1-3 months
• Hosting — contracting with a facility that provides power, cooling, and operational monitoring at a per-kWh rate
• Operations — ongoing uptime management, pool participation (where miners combine hashrate to smooth reward variance), and maintenance
• BTC management — decisions about selling vs holding mined BTC, often guided by cash flow needs and market views
• Hardware exit — at end-of-life, ASICs are either replaced, resold on the secondary market, or decommissioned

Where Digital Grid Capital fits

Digital Grid Capital operates an institutional-scale hydro-cooled mining fleet under a structured 36-month strategy. The approach combines disciplined power contracting, efficient hardware selection, and cycle-timed operations with a defined exit designed to align with Bitcoin's historical post-halving appreciation window.

The result: a vehicle that produces Bitcoin through operations (rather than purchasing at spot) and distributes BTC in-kind to accredited limited partners at exit.