Calcium carbide is produced industrially in an electric arc furnace from a mixture of lime and coke at approximately . This is an endothermic reaction requiring  per mole and high temperatures to drive off the carbon monoxide. This method has not changed since its invention in 1892:
:CaO + 3 C → CaC + CO
The high temperature required for this reaction is not practically achievable by traditional combustion, so the reaction is performed in an electric arc furnace with graphite electrodes. The carbide product produced generally contains around 80% calcium carbide by weight. The carbide is crushed to produce small lumps that can range from a few mm up to 50 mm. The impurities are concentrated in the finer fractions. The CaC content of the product is assayed by measuring the amount of acetylene produced on hydrolysis. As an example, the British and German standards for the content of the coarser fractions are 295 L/kg and 300 L/kg respectively (at 101 kPa pressure and  temperature). Impurities present in the carbide include calcium phosphide, which produces phosphine when hydrolysed.
This reaction was an important part of the industrial revolution in chemistry, and was made possible in the United States as a result of massive amounts of inexpensive hydroelectric power produced at Niagara Falls before the turn of the 20th century.
The electric arc furnace method was discovered in 1892 by T. L. Willson, and independently in the same year by H. Moissan. In Jajce, Bosnia and Herzegovina, the Austrian industrialist Josef Kranz and his "Bosnische-Elektrizitäts AG" company, whose successor later became "Elektro-Bosna", opened the largest chemical factory for the production of calcium carbide at the time in Europe in 1899. A hydroelectric power station on the Pliva river with an installed capacity of 8 MW was constructed to supply electricity for the factory, the first power station of its kind in Southeast Europe, and became operational on 24 March 1899.