Bitcoin Mining 101
This page is a beginner-friendly guide to Bitcoin mining. It is written for people who are curious about how mining works, what hardware is involved, and what it really looks like to run miners in the real world.
Lundquist Digital Mining is a family-owned, U.S.-based Bitcoin mining operation. We are a Service-Disabled Veteran-Owned Small Business (SDVOSB) focused on safe engineering, long-term infrastructure, and honest participation in the Bitcoin network. We do not sell hashrate, operate a cloud mining service, or offer investment products.
Core Mining Concepts (Plain English)
Before getting into hardware and economics, it helps to understand a few key terms used in Bitcoin mining.
What Bitcoin Is
Bitcoin is an open, decentralized digital money system. It is not controlled by a company or government. Anyone can participate by running software, holding coins, or mining.
Why Mining Exists
Mining is the process that secures Bitcoin. Miners perform “proof of work” to add new blocks of transactions to the blockchain and receive newly issued Bitcoin as a reward.
Measuring Mining Power
Hash rate is a measure of how many guesses (hash calculations) a miner can make per second to try to find a valid block. More hash rate means more chances to win a block reward.
Automatic Adjustment
Every ~2 weeks, the Bitcoin network adjusts the difficulty of mining so that blocks continue to be found about every 10 minutes, regardless of how much hash rate is on the network.
Specialized Hardware
An ASIC (Application-Specific Integrated Circuit) is hardware designed for a single task. For Bitcoin, ASIC miners are the only realistic way to mine competitively today.
Sharing Rewards
Individual miners connect to a mining pool to combine hash rate and receive more frequent payouts instead of waiting for a rare solo block.
How Bitcoin Mining Works (High-Level)
At a simple level, mining is about turning electricity into security for the Bitcoin network.
From Transactions to Blocks
1. People broadcast Bitcoin transactions to the network.
2. Nodes verify transactions and hold them in a waiting area (the mempool).
3. Miners gather transactions into a candidate block.
4. Miners race to find a block hash that meets the current difficulty target.
5. The first miner to find a valid hash announces the block to the network.
6. Other nodes verify the block. If valid, it’s added to the blockchain.
7. The winning miner (or mining pool) receives the block reward + transaction fees.
Proof of work makes it extremely expensive for an attacker to rewrite history, because they would have to redo the work for many blocks faster than the honest network.
Mining Hardware & Home Environment
Most people are surprised by how much power, heat, and noise real mining hardware produces. Marketing photos often hide the realities.
What We Use
We currently operate Canaan Avalon Q-series ASIC miners. These units are designed specifically for Bitcoin and run 24/7 when properly powered, cooled, and monitored.
Electrical Requirements
ASIC miners draw a significant amount of power. Safe mining means using dedicated circuits, correct breaker sizes, and appropriately rated wiring. Overloading household circuits is dangerous and irresponsible.
Managing the Environment
Miners behave like concentrated space heaters with loud fans. Inline fans, insulated ducting, and exhaust shrouds are used to remove heat from the mining area and control noise.
Dedicated VLAN
Our miners connect over a dedicated “Miners Network” VLAN. This isolates mining traffic from home and office devices, which improves security and keeps things organized.
Watch the System
Monitoring power draw, temperatures, and pool performance helps catch issues early. Mining is not “set and forget”; it requires ongoing attention.
The Economics of Mining: Reality Check
Online calculators and marketing pitches often oversimplify mining economics. In reality, profitability depends on many factors:
- Upfront hardware cost (ASICs, fans, ducting, networking, safety equipment)
- Electricity rate (dollars per kWh)
- Bitcoin price and volatility
- Difficulty changes over time
- Operating environment and maintenance costs
At Lundquist Digital Mining, we treat mining as long-term infrastructure, not a short-term speculation. We do not promise profits or returns, and we encourage anyone considering mining to run conservative numbers and think in years, not days.
Ways to Participate in Mining
There are several ways individuals can interact with Bitcoin mining. Each comes with trade-offs.
Run ASICs at Home
Pros: Full control, direct participation, educational. Cons: Power, heat, noise, and potential HOA or landlord restrictions. Requires careful electrical and cooling design.
Colocate at a Mining Farm
Pros: No heat or noise at home, professional facilities. Cons: Counterparty risk, hosting contracts, variable fees. Do thorough due diligence on any hosting provider.
Be Extremely Cautious
Many “cloud mining” offerings have been scams or poor deals. Be wary of any offer that promises high guaranteed returns for little risk or effort.
Safety, Scams, and Common Mistakes
Mining touches both the digital and physical worlds. Mistakes in either domain can be costly.
Things to Avoid
• Overloading home electrical circuits or using unsafe extension cords
• Ignoring heat and noise until it becomes a problem
• Trusting unverified “cloud mining” or hosting offers
• Mining altcoins with hardware meant for Bitcoin, or vice versa
• Making decisions solely based on short-term price moves
We believe mining should be approached with respect for both electrical safety and financial risk. When in doubt, slow down and ask questions.
Where Lundquist Digital Mining Fits In
Lundquist Digital Mining is a private mining operation. We:
- Run our own ASIC hardware (Canaan Avalon Q-series)
- Engineer and maintain our own power, cooling, and network setups
- Mine exclusively for our own business accounts
- Do not sell hashrate, contracts, or investment products
- Share what we learn to help others think more clearly about mining
If you decide to explore hardware further, our Recommended Equipment page outlines categories of ASICs, airflow tools, power gear, networking devices, and basic instruments we use or consider reasonable for small, well-engineered setups.