Curious how miners make money securing Bitcoin? The short answer: miners bundle transactions into blocks and compete to add those blocks to the blockchain. When a miner (or, more commonly, a mining pool) wins, they collect two income streams—the block subsidy (newly issued BTC) plus transaction fees from the transactions in that block. Over time, the subsidy shrinks via “halvings,” while fees are expected to matter more.
Below is a practical walkthrough—from first principles to real-world payout schemes—so you can understand the economics before you ever plug in an ASIC.
What mining actually does
Mining is Bitcoin’s way to order transactions, secure the ledger, and issue new coins. In proof-of-work (PoW), miners repeatedly hash a block header until they find a nonce that produces a hash below the network’s target. The first valid block propagated to the network claims the reward via a special “coinbase” transaction.
That reward has two parts:
- Block subsidy: newly created bitcoin paid to the winning block producer. As of April 2024 the subsidy is 3.125 BTC per block (it halves roughly every four years/210,000 blocks).
- Transaction fees: the sum of fees users attach to get their transactions included; miners earn the fees from the transactions they include in the block.
How much do miners earn per block in 2025?
The fixed part is easy: 3.125 BTC in subsidy. The variable part—fees—depends on demand for block space (how full the mempool is and how urgently users want confirmation). When activity spikes (for example, after protocol or application launches), fee revenue can surge; in quieter periods, fees can fall sharply.
Why difficulty matters
Bitcoin aims for a 10-minute average block interval. To keep that rhythm as global hash power rises or falls, the protocol recalibrates difficulty every 2,016 blocks (≈ two weeks). Higher difficulty means each hash has a smaller chance to win, so a given machine earns less unless price or fees rise. Even in pools, short-term results include some “luck,” but over many blocks earnings converge to the expected value.
Pools and payout methods: how individual miners actually get paid
Solo mining is possible but rarely economical. Most miners join pools to smooth income: everyone contributes hash rate; when the pool finds a block, rewards are shared by a formula. Common payout schemes include:
- PPS (Pay-Per-Share): The pool pays a fixed amount for each valid share submitted, regardless of whether the pool found a block. It’s predictable for miners; the pool bears variance risk (and charges higher fees).
- FPPS (Full PPS): Like PPS, plus the pool also pays out an estimate of fees, not only subsidy—further smoothing income. (Sometimes called PPS+.)
- PPLNS (Pay-Per-Last-N-Shares): You’re paid only when the pool actually finds a block, proportionally to your shares in the most recent window. Lower fees, higher variance.
PPS/FPPS = steadier cash flow at a cost; PPLNS = cheaper fees but bumpier income.
Fees 101: why users pay, and why miners care
Each block has limited space. Users attach fees to incentivize inclusion; the winning miner collects those fees. When demand jumps (congested mempool), fees rise and miner revenue gets a boost. When demand slows, fees drop—sometimes to a tiny fraction of miner income.
The halving effect: shrinking subsidy, growing role for fees
Halvings cut the subsidy by 50%—from 50 BTC in 2009 to 3.125 BTC since April 2024. Over the very long run (toward the 21 million cap around 2140), fees must carry more of the load. That evolution is widely discussed in mainstream guides and research notes.
The miner’s dashboard metric: “hashprice”
Professionals track revenue not only “per block,” but per unit of hash power per day. The industry uses hashprice, coined and maintained by Luxor, defined as the expected daily income for 1 TH/s (or 1 PH/s) of hashing power. Hashprice bakes in BTC price, current difficulty, the 3.125 BTC subsidy, and observed fee levels—giving a single, comparable revenue number over time. News outlets also reference it as a shorthand for mining profitability.
If hashprice falls below your all-in operating cost per TH/s/day, you’re mining at a loss until conditions improve or costs drop.
Costs decide who survives
Revenue is only half the story. Miners compete on:
- Electricity price and stability (OPEX). Global consumption estimates from Cambridge’s CBECI are built on the idea that miners act like rational firms—unprofitable rigs switch off. Cheap, steady power is a durable edge.
- Hardware efficiency (CAPEX/OPEX). Newer ASICs deliver more TH/s per watt; if you can’t refresh hardware or optimize firmware/cooling, your energy cost per TH rises. (Public miners disclose refresh cycles; industry trackers normalize revenue by efficiency.)
- Pool fees, downtime, and location-specific costs (cooling, real estate, compliance).
- Volatility hedging. Some miners use hashrate/derivative products to lock in revenue or electricity spreads.
A miner’s income, step by step
- Connect to a pool and submit “shares,” proving your work toward the pool’s target.
- Pool finds a block (or doesn’t). Under PPS/FPPS you’re paid per share; under PPLNS you’re paid when the pool actually wins.
- Pool payout lands in your account/wallet, minus pool fees.
- Your actual profit = (hashprice × your hash rate) − (power cost + cooling + pool fees + overhead). Many operators also track energy-adjusted hashprice to benchmark revenue per kWh used.
What changes block-to-block?
- Difficulty: recalculated every 2,016 blocks, reacting to network hash rate. If many miners join, difficulty climbs and each TH/s earns less; if miners drop off, the opposite.
- Fees: fluctuate with demand for block space (busy mempool → higher fees; quiet mempool → lower fees).
- BTC price: drives the fiat value of your rewards. Hashprice moves with both BTC price and on-chain conditions.
How beginners misread mining
- “More hash = linear profit.” True only if difficulty and price stood still—which they don’t. Earnings per TH/s/day rise and fall with network conditions.
- Ignoring fee variance. In PPLNS, you might have days of great luck (high-fee blocks) and dry spells. In PPS/FPPS, pools smooth that variance but charge for it.
- Underestimating power logistics. Cheap power isn’t enough; you need uptime, cooling, and predictable curtailment rules with your utility or hosting provider (downtime crushes effective revenue).
- Forgetting the basics. Always confirm the right network, pool settings, and payout address; one misconfiguration can burn days of hashing with no pay.
The takeaway
Miners earn subsidy + fees, mediated by difficulty and pooled by payout schemes like PPS/FPPS/PPLNS. Profitability breathes with BTC price, fee markets, hardware efficiency, and—most of all—power cost. If you’re just getting started, study the difficulty cycle, pick a reputable pool and payout plan, and learn to read hashprice as closely as you would your power bill. That’s how miners actually earn—and survive—through the cycles.