The simplified circuit diagram at right illustrates in principle how a ground loop works. Two circuits share a common wire connecting them to ground. Ideally the ground conductor should have no resistance (), so the voltage drop across it, , should be zero, giving each circuit a solid 0 V at its ground connection, isolating them from each other. In this case the output of circuit 2 is simply . However, if the ground conductor has significant resistance, , and current is flowing through it from circuit 1, a voltage will develop across it. So the ground connection of both circuits will no longer be at 0 V. This ground voltage will be applied to circuit 2, and add to the output:
So the two circuits are no longer isolated from each other, and the output of circuit 2 will have interference from circuit 1 in it. If circuit 2 is a stereo system, and circuit 1 has large AC currents flowing in it, the interference may be heard as a 50/60 Hz hum in the stereo speakers. Also, both circuits will have voltage on their grounded parts, which may be exposed to contact, possibly presenting a shock hazard. This is true even if circuit 2 is turned off.
A ground loop in a medium connecting circuits designed to be at the same potential but actually at different potentials can be hazardous, or cause problems with the electrical system, because the electrical potential and soil resistance at different points on the surface of the Earth can vary.
In a floating ground system, that is, one not connected to Earth, the voltages will probably be unstable, and if some of the conductors that constitute the return circuit to the source have a relatively high resistance, or have high currents through them that produce a significant voltage (I·R) drop, they can be hazardous.
Low current wiring is particularly susceptible to ground loops. If two pieces of audio equipment are plugged into different power outlets, there will often be a difference in their respective ground potentials. If a signal is passed from one to the other via an audio connection with the ground wire intact, this potential difference causes a spurious current through the cables, creating an audible buzz at the AC mains base frequency (50 or 60 Hz) and the harmonics thereof (120 Hz, 240 Hz, and so on), called mains hum. Sometimes, performers remove the grounding pin from the cord connecting an appliance to the power outlet; however, this creates an electrocution risk. The first solution is to ensure that all metal chassis are interconnected, then connected to the electrical distribution system at one point (often referred to as a "single-point ground"). The next solution is to have shielded cables for the low currents, with the shield connected only at the source end. Another solution is to use isolation transformers, opto-isolators or baluns to avoid a direct electrical connection between the different grounds. However, bandwidth of such is of consideration. The better isolation transformers have grounded shields between the two sets of windings. In circuits having high frequencies, such as computer monitors, chokes are placed at the end of the cables just before the termination to the next appliance, e.g., the computer. These chokes are most often called ferrite core devices.
In video, ground loops can be seen as hum bars (bands of slightly different brightness) scrolling vertically up the screen. These are frequently seen with Video projectors where the display device has its case grounded via a 3-prong plug, and the other components have a floating ground connected to the CATV coax. In this case the video cable is grounded at the projector end to the home electrical system, and at the other end to the cable TV's ground, inducing a current through the cable which distorts the picture. As with audio ground loops, this problem can be solved by placing an isolation transformer on the cable-tv coax. Alternatively, one can use a surge protector that includes coax protection. If the cable is routed through the same surge protector as the three-prong device, both will be regrounded to the surge protector.
Ground loop issues with television coaxial cable can also affect any connected audio devices such as a receiver. Even if all of the audio and video equipment in, for example, a home theater system is plugged into the same power outlet, and thus all share the same ground, the coaxial cable entering the TV is actually grounded at the cable company. The potential of this ground is likely to differ slightly from the potential of the house's ground, so a ground loop occurs, causing undesirable mains hum in the system's speakers. A cheap way to resolve this problem is to buy a 75-Ohm Coax Combiner-Splitter and a "Matching Transformer". The 75-Ohm Coax Combiner/Splitter converts the impedance from 75 ohms to 300 ohms and the "Matching Transformer" converts the impedance from 300 ohms to 75 ohms. Both parts connected together will act as a "poor man's" isolation transformer.
Ground and ground loops are also important in designing circuits. In many circuits, large currents may exist through the ground plane, leading to voltage differences of the ground reference in different parts of the circuit, leading to hum and other problems. Several techniques should be used to avoid ground loops, and otherwise, guarantee good grounding: