The Bitcoin Mining Deskbook

A one-stop shop to start your journey down the bitcoin mining rabbit hole.

People regularly ask me where they can go to learn more about Bitcoin mining. I usually reply by rattling off a few articles that are floating at the top of my head at the moment, offer to send them a few things when I get some time, and then promptly forget the conversation ever happened. If you’re reading this and I’ve done this to you, I’m sorry.  This article is an attempt at rectifying these transgressions.

Below, I’ve collected and categorized some of the best Bitcoin mining content available today. Most of the content below is written by professionals in mining or mining-adjacent companies within the Bitcoin ecosystem. You’ll see that I rely heavily on the research teams at Hashrate Index, Braiins, Galaxy Digital, River, and NYDIG, among others. Together, these credible sources of expertise form a good starting point to develop a fairly complete understanding of Bitcoin mining as a whole.

I’m certainly biased, but I find bitcoin mining to be endlessly fascinating. It pairs large-scale infrastructure with software development, high finance with construction, and debates on human energy consumption with debates on block space utilization. I’ve been in the industry for two years now, and I still learn an astonishing amount almost every day. As a bitcoin miner, I never want for more intellectual stimulation.

It may be a bit arcane, particularly if you are new to bitcoin in general. I hope that whatever your background or level of bitcoin education and experience, you find this to be a useful tool with which to explore the wide and interesting world of bitcoin mining.

Now let’s dig in.

Bitcoin Basics

You are new to bitcoin in general. To understand mining, you need to have at least a cursory understanding of bitcoin as a digital asset, a proof-of-work protocol, and a global, censorship-resistant monetary network.

1. NYDIG: Bitcoin 101

2. River Financial: What is Bitcoin?

Mining Basics

You’re ready to dip your toe into bitcoin mining. This goes beyond the “computers solving complex math problems” explanation you’ve likely heard before, and gets into the specifics.

1. Braiins: Bitcoin Mining is NOT Solving Complex Math Problems [Beginner's Guide]

2. Braiins: How to Mine Bitcoin [Beginner’s Guide]

3. Hashrate Index: What is the Bitcoin Mining Block Reward?

4. Hashrate Index: What is Bitcoin Mining Difficulty and How is Bitcoin Mining Difficulty Calculated?

5. River Financial: What is Bitcoin Mining?

6. Hashrate Index: What Are Bitcoin Mining Pools? How Mining Pools Work and How They are Evolving

Mining and the Energy Debate

You’ve learned that bitcoin mining consumes prodigious amounts of electricity - in fact it is the most energy-dense form of computing in the world. This has caused consternation and moral panic amongst uninformed environmentalists, and has been used as a cudgel by intellectually dishonest bitcoin opponents seeking to delegitimize the industry for their own ends. What follows is a collection of content that brings context and nuance to your mining energy debate.

1. Braiins: A Summary of Bitcoin’s Energy Consumption Debate

2. Braiins: So You Think Bitcoin Mining is Wasteful?

3. Hashrate Index: How Much Power Does Bitcoin Mining Use? Putting Bitcoin’s Energy Appetite Into Perspective

4. Hashrate Index: Bitcoin Mining Uses Less Energy Than Christmas Lights

5. Nic Carter: How Much Energy Does Bitcoin Actually Consume?

6. Nic Carter: The Last Word on Bitcoin's Energy Consumption

7. Nic Carter: Noahbjectivity on Bitcoin Mining

8. Galaxy Digital: On Bitcoin’s Energy Consumption

9. NYDIG: Bitcoin Net Zero

Mining, Policy, and Regulation

You’re ready to evangelize. Bitcoin mining, like the broader bitcoin ecosystem, is growing up. Like viral antibodies, a cohort of trade associations and advocacy groups has sprung up in recent years to advocate on behalf of the bitcoin protocol to legislators and policy makers at the local, state, and federal level. Some of these, like the Satoshi Action Fund, are specifically focused on policy advocacy around mining. Others, like the Bitcoin Today Coalition, are more broadly focused on bitcoin writ large but also have mining-focused initiative within them. Below are a few of the most notable groups, with links to helpful mining-focused resources from each organization.

1. The Bitcoin Today Coalition

   1. Bitcoin Today Coalition: Energy and Climate Implications of Digital Assets

2. Satoshi Action Fund

   1. Satoshi Action Fund: Bitcoin and Bitcoin Mining, What State Legislators Need to Know

3. Bitcoin Policy Institute

   1. Bitcoin Policy Institute: Bitcoin Versus the Banks: Which is Better for the Planet?

4. Texas Blockchain Council

   1. TBC - Large Flexible Load Task Force Presentation

5. Digital Chamber of Commerce

   1. Digital Chamber of Commerce: Digital Asset Mining

Mining and Transaction Fees

Transaction fees are part of what incentivizes miners to deploy the eye-watering amounts of capital required to build and run mining infrastructure. As you’ll see in the next section, they’re also projected to play an increasing role in funding bitcoin’s security budget in the future. Below are some resources to better understand transactions fees as they related to mining.

1. Braiins: Transaction Fee “Luck” for Bitcoin Miners

2. Braiins: Understanding Bitcoin’s Fee-Based Security

3. Galaxy Digital: Why are Bitcoin Transaction Fees So Low?

Mining and Network Security

You can see that miners are the security forces of the global bitcoin network. Below, you can find resources to understand some of the security vulnerabilities of the bitcoin network, how mining helps to mitigate them, and some conceptual frameworks for understanding how mining-as-security will be incentivized in the future.

1. Lyn Alden: Bitcoin: Fee-Based Security Modeling

2. Bitcoin Magazine: EVEN WITHOUT A MINING SUBSIDY, THESE TWO FACTORS WILL PROTECT BITCOIN INTO THE FUTURE

3. Braiins: Bitcoin Mining Attacks Explained

4. Braiins: Can Quantum Computers Attack Bitcoin?

5. Braiins: How Much Would it Cost to 51% Attack Bitcoin?

Big bitcoin mining pools are not a centralization risk

Mining, ASICs, and Hashrate

Starting in 2012, bitcoin started requiring ASICs, or Application Specific Integrated Circuits, to mine efficiently and competitively. In part, this was because of the rapid growth in bitcoin’s global hashrate. What are ASICs and hashrate (also known as hashpower), you ask? Read below to find out.

1. The Bitcoin Mining Museum

2. River Financial: Buying or Building a Mining Rig? What You Need to Know

3. River Financial: What Could Bitcoin Mining Look Like at One Zettahash?

4. Hashrate Index: What Is Bitcoin’s Hashrate and How Is Bitcoin's Hashrate Calculated?

5. Anicca Research: The Alchemy of Hashpower, Part I.

6. Anicca Research: The Alchemy of Hashpower, Part II.

7. Braiins: Impact of Temperature on Efficiency of Antminer X19’s

Mining and “Hashprice”

Hashrate is a digital commodity produced and sold by miners. Hashprice is the price of this commodity. A whole world of derivatives is growing up around this commodity, and it is how miners think about their revenue. Read below to better understand how hashprice is calculated and how miners are using it to manage risk.

1. Hashrate Index: Hashprice Index

2. Hashrate Index: The Search for a Hashprice Floor: A New Model for Hashprice Resistance Levels

3. Galaxy Digital: Analyzing Public Miners with Breakeven Hashprice

Mining Protocols and Pools

Mining is largely a physical infrastructure game - think steel in the ground, electricity flowing across conductors, and banks of thousands of ASICs. But it also requires its own unique digital infrastructure to serve its purpose of securing the network, appending transactions to the blockchain, and facilitating bitcoin’s token emission schedule. Mining protocols run by mining pools are how most miners convert their hashrate into bitcoin at the current hashprice. Read below to understand what a mining protocol is, and the role that mining pools play in today’s global mining ecosystem.

1. Braiins: Mining Protocols and the Future of Stratum at Bitcoin 2022

2. Braiins: Bitcoin Mining Pools: Luck, Shares, and Estimated Hashrate Explained

3. Braiins: Why Pools Mine Empty Blocks and How Stratum V2 Fixes This

4. Braiins: Bitcoin’s Decentralization with Stratum V2

5. Braiins: Hashrate Robbery: Stratum V2 Fixes This (and More)

6. Hashrate Index: How to Join a Bitcoin Mining Pool, a Step-By-Step Guide

7. Galaxy Digital: The Future of Bitcoin Mining Protocols: Making Every Watt Count

8. Hashrate Index: Bitcoin Mining Pool Payment Methods Explained (PPS vs FPPS vs PPLNS vs PPS+)

9. Stratum Protocol Open Source Development Organization

Mining and Bitcoin Node Architecture

Technically ASICs are “nodes” on the bitcoin network, but they do not serve the same purpose as the full nodes you have heard of. Read below for a quick primer on the difference between miners and nodes, and the formal documentation for how to run your own full node.

1. Braiins: Bitcoin Nodes vs. Miners: Demystified

2. Bitcoin Core: Running a Full Node

Mining and Energy Infrastructure

Given its large energy footprint, uniquely flexible nature, and location-agnostic operational requirements, bitcoin mining is increasingly being viewed as a tool to balance fragile grids, monetize wasted or stranded energy, and incentivize the construction of new generation assets. Many believe that bitcoin mining will become a widely used tool by generators and grid operators to help us navigate the energy transition responsibly. Below are a few resources to get you started down this rabbit hole.

1. Braiins: Bitcoin Mining & The Grid (Part 1): Generators

2. Braiins: Bitcoin Mining & The Grid (Part 2): Transmission, Curtailment, and Behind-The-Meter

3. Braiins: On the Merits of Proof of Work

4. Hashrate Index: Bitcoin Mining as a Controllable Load Resource: How Bitcoin Mining's 'Economic Battery' Can Power the Grid

5. Braiins: Optimizations for Bitcoin Mining with Intermittent Energy Sources

6. Braiins: Economics of Bitcoin Mining with Solar Energy

7. Lancium: Impacts of Large, Flexible Data Center Operations on the Future of ERCOT

Mining and Energy Arbitrage

Bitcoin mining is a way of arbitraging energy - a miner literally buys megawatt-hours from a grid operator or power generator, converts that energy into hashrate using ASICs, and then (most of the time) sells that hashrate to a pool for more than it cost to produce it. Read below to learn more about the logic of mining as an energy arbitrage method.

1. Hashrate Index: Energy Arbitrage: Analyzing Bitcoin Mining’s Historical Revenue per kWh

2. Hashrate Index: Analyzing Electricity Prices' Impact on Bitcoin Mining Profitability in Bull and Bear Markets

Mining and Risk Management

Miners, like any other commodity producer, must skillfully manage risk in order to survive the cyclical nature of the industry. 2022 was an object lesson in the absolute necessity of intelligent risk management and the consequences of failure. Traditionally miners have not taken a systematic approach to managing risk, but that is now changing with the advent of products like Luxor’s Hashprice Non-Deliverable Forward Contract and other hashprice derivatives.

1. Bitcoin Magazine: NEWS BITCOIN MINING SERVICE PROVIDER LUXOR LAUNCHES HASHPRICE OTC DERIVATIVE

2. Hashrate Index: The Hashprice Covered Call Strategy: Trading ASICs to Generate Bitcoin Returns

3. Hashrate Index: Power to the Plebs: Hedging Your Bitcoin Mining Expenses and Risks With a Bitcoin ETF Covered Call

4. Coindesk: Bitcoin Mining Companies Need to Better Manage Risk

Mining Commercial Strategy

The participants in the bitcoin mining industry vary widely in type, size, and strategy. Read below for a few different ways of thinking about the mining ecosystem and its players.

1. Braiins: Bitcoin Mining Profiles: The Investor, The Entrepreneur, and The Prospector

2. Anicca Research: The Intelligent Bitcoin Miner, Part I.

3. Anicca Research: The Intelligent Bitcoin Miner, Part II.

4. Anicca Research: Bitcoin Mining’s Three Body Problem

Mining Profitability Calculators

One of the most common questions I get is “how profitable is it to mine bitcoin?” Read below for a few different tools to determine mining profitability under varying market and business assumptions.

1. Braiins: How to Calculate Bitcoin Mining Profitability

2. Hashrate Index: How to Calculate Bitcoin Mining Profitability

3. Galaxy Digital: How Much Does It Cost To Mine a Bitcoin

Mining and Ordinals

Can’t write an article on mining resources without including the current “current thing.” Read below for a few different takes on how mining and ordinals may interact as the nascent field of ordinal inscriptions matures.

Don't censor the Bitcoin monkey jpegs! Ordinals FTW?

1. NYDIG: Research Weekly - Ordinals and the Case of the Missing Fees

Mining and Bitcoin Improvement Proposals

Bitcoin Improvement Proposals are how bitcoin core developers communicate proposed improvements to the bitcoin protocol. These go through a consensus process, and if accepted by a super majority of the bitcoin ecosystem, get implemented through “soft forks.” Learn about how they apply to bitcoin mining below.

1. Hashrate Index: A Bitcoin Miner's Guide to Bitcoin Upgrades

Mining and Scam Avoidance

There are a few ways for retail to get into mining, usually involving buying a rig or handful of rigs and hosting them at a reputable retail hosting company like River Financial or Print Crypto. Cloud Mining, however, is almost always a scam, or at the very least, unprofitable relative to just buying spot bitcoin. Read below for a few notes on this scam-ridden corner of the mining ecosystem.

1. Braiins: Bitcoin Mining Scams to Avoid (Braiins Pool Impersonators)

2. Andrey Costello: Top 10 Cloud Mining Scam Signs

Mining and Waste Heat

ASICs produce an incredible amount of heat as they convert electricity into hashes (also known as doing “work” in the thermodynamic sense, hashes being the literal “proof” of work that is the namesake of the consensus algorithm underpinning the bitcoin protocol). In recent years, a cottage industry of monetizing this waste-heat has popped up. Read below for a high level survey.

Braiins: Green Innovation in Bitcoin Mining: Recycling ASIC Heat

Mining 2022 Year End Research Reports

Good research and data analytics platforms produce year-end reports that survey the state of the mining industry on an annual basis. 2022 was a watershed year for bitcoin mining, largely characterized by bankruptcies and pain amongst publicly traded miners and private miners alike, all while hashrate continued its inexorable march upwards. Here is a selection of some of the best reports that came out at the end of last year.

1. Galaxy Digital: Surviving the Perfect Storm – 2022 End of Year Mining Report

2. Hashrate Index: Hashrate Index 2022 Bitcoin Mining Year in Review

3. NYDIG: 2022 Review and Look Ahead

Conclusion

Mining is a tough space to break into and understand. But it’s also an incredibly welcoming space, with homes for people of almost every background imaginable. Whether you are an investor, a hobbyist, or someone entertaining the idea of joining the mining industry professionally, I hope this compendium has been helpful. I will be updating this as I discover new, high quality resources. If you have something you’d like me to add, please feel free to reach out directly. Thank you!