diff --git a/docker/README.md b/docker/README.md
index 51d492866..633da033f 100644
--- a/docker/README.md
+++ b/docker/README.md
@@ -13,6 +13,11 @@ docker | 1.13.0
 ### Table of content
  * [Create lightning network cluster](#create-lightning-network-cluster)
  * [Connect to faucet lightning node](#connect-to-faucet-lightning-node)
+ * [Building standalone docker images](#building-standalone-docker-images)
+ * [Using bitcoind version](#using-bitcoind-version)
+   * [Start Bitcoin Node with bitcoind using Docker Compose](#start-bitcoin-node-with-bitcoind-using-docker-compose)
+   * [Generating RPCAUTH](#generating-rpcauth)
+   * [Mining in regtest using bitcoin-cli](#mining-in-regtest-using-bitcoin-cli)
  * [Questions](#questions)
 
 ### Create lightning network cluster
@@ -327,10 +332,49 @@ Instructions on how to build standalone docker images (for development or
 production), outside of `docker-compose`, see the
 [docker docs](../docs/DOCKER.md).
 
+### Using bitcoind version
+If you are using the bitcoind version of the compose file i.e `docker-compose-bitcoind.yml`, follow these additional instructions:
+
+#### Start Bitcoin Node with bitcoind using Docker Compose
+To launch the Bitcoin node using bitcoind in the regtest network using Docker Compose, use the following command:
+```shell
+$  NETWORK="regtest" docker-compose -f docker-compose-bitcoind.yml up
+```
+
+#### Generating RPCAUTH
+In bitcoind, the usage of `rpcuser` and `rpcpassword` for server-side authentication has been deprecated. To address this, we now use `rpcauth` instead. You can generate the necessary rpcauth credentials using the [rpcauth.py script](https://github.com/bitcoin/bitcoin/blob/master/share/rpcauth/rpcauth.py) from the Bitcoin Core repository.
+
+Note: When using any RPC client, such as `lnd` or `bitcoin-cli`, It is crucial to either provide a clear text password with username or employ cookie authentication.
+
+#### Mining in regtest using bitcoin-cli
+1. Log into the `lnd` container:
+```shell
+$  docker exec -it lnd bash
+```
+2. Generate a new backward compatible nested p2sh address:
+```shell
+lnd$  lncli --network=regtest newaddress np2wkh
+```
+3. Log into the `bitcoind` container:
+```shell
+$  docker exec -it bitcoind bash
+```
+4. Generate 101 blocks:
+```shell
+# Note: We need at least "100 >=" blocks because of coinbase block maturity.
+bitcoind$  bitcoin-cli -chain=regtest -rpcuser=devuser -rpcpassword=devpass generatetoaddress 101 2N1NQzFjCy1NnpAH3cT4h4GoByrAAkiH7zu
+```
+5. Check your lnd wallet balance in regtest network:
+```shell
+lnd$ lncli --network=regtest walletbalance
+```
+
+Note: The address `2N1NQzFjCy1NnpAH3cT4h4GoByrAAkiH7zu` is just a random example. Feel free to use an address generated from your `lnd` wallet to send coins to yourself.
+
 ### Questions
 [![Irc](https://img.shields.io/badge/chat-on%20libera-brightgreen.svg)](https://web.libera.chat/#lnd)
 
-* How to see `alice` | `bob` | `btcd` logs?
+* How to see `alice` | `bob` | `btcd` | `lnd` | `bitcoind` logs?
 ```shell
-$  docker-compose logs <alice|bob|btcd>
+$  docker-compose logs <alice|bob|btcd|lnd|bitcoind>
 ```
diff --git a/docker/bitcoind/Dockerfile b/docker/bitcoind/Dockerfile
new file mode 100644
index 000000000..cf2ad7010
--- /dev/null
+++ b/docker/bitcoind/Dockerfile
@@ -0,0 +1,7 @@
+FROM lightninglabs/bitcoin-core:${BITCOIN_VERSION:-25}
+
+# Copy the start script into the container
+COPY start-bitcoind.sh .
+
+# Set execute permissions for the script
+RUN chmod +x ./start-bitcoind.sh
diff --git a/docker/bitcoind/start-bitcoind.sh b/docker/bitcoind/start-bitcoind.sh
new file mode 100755
index 000000000..ecc35707c
--- /dev/null
+++ b/docker/bitcoind/start-bitcoind.sh
@@ -0,0 +1,75 @@
+#!/usr/bin/env bash
+
+# exit from script if error was raised.
+set -e
+
+# error function is used within a bash function in order to send the error
+# message directly to the stderr output and exit.
+error() {
+    echo "$1" > /dev/stderr
+    exit 0
+}
+
+# return is used within the bash function in order to return the value.
+return() {
+    echo "$1"
+}
+
+# set_default function gives the ability to move the setting of default
+# env variable from docker file to the script thereby giving the ability to the
+# user to override it during container start.
+set_default() {
+    # docker initialized env variables with blank string and we can't just
+    # use -z flag as usually.
+    BLANK_STRING='""'
+
+    VARIABLE="$1"
+    DEFAULT="$2"
+
+    if [[ -z "$VARIABLE" || "$VARIABLE" == "$BLANK_STRING" ]]; then
+
+        if [ -z "$DEFAULT" ]; then
+            error "You should specify default variable"
+        else
+            VARIABLE="$DEFAULT"
+        fi
+    fi
+
+   return "$VARIABLE"
+}
+
+# Set default variables if needed.
+
+# This password is for testing and it is equivalent to `devpass`.
+# It is generated from (Note: It is fully deterministic, yet the random salt
+# generated by the script ensures that the resulting hash is always unique.):
+# https://github.com/bitcoin/bitcoin/blob/master/share/rpcauth/rpcauth.py
+DEFAULT_PASSWORD='22d3dd348a42d7f040487887b0ea6cc7$79ce831819539c78537884f85b65a09e15b079d79eb8f99447ea9b0a58fa66a6'
+
+RPCAUTH=$(set_default "$RPCAUTH" "devuser:$DEFAULT_PASSWORD")
+NETWORK=$(set_default "$NETWORK" "regtest")
+DEBUG=$(set_default "$BITCOIND_DEBUG" "1")
+
+PARAMS=""
+if [ "$NETWORK" != "mainnet" ]; then
+   PARAMS="-$NETWORK"
+fi
+
+PARAMS=$(echo $PARAMS \
+    "-debug"="$DEBUG" \
+    "-rpcauth"="$RPCAUTH" \
+    "-datadir"="/data" \
+    "-debuglogfile"="/data/debug.log" \
+    "-rpcbind"="0.0.0.0" \
+    "-rpcallowip"="0.0.0.0/0" \
+    "-zmqpubrawblock"="tcp://0.0.0.0:28332" \
+    "-zmqpubrawtx"="tcp://0.0.0.0:28333" \
+    "-txindex"
+)
+
+# Add user parameters to the command.
+PARAMS="$PARAMS $@"
+
+# Print command and start bitcoin node.
+echo "Command: bitcoind $PARAMS"
+exec bitcoind $PARAMS
diff --git a/docker/btcd/start-btcd.sh b/docker/btcd/start-btcd.sh
index 4f5f7ba36..a0b56c267 100755
--- a/docker/btcd/start-btcd.sh
+++ b/docker/btcd/start-btcd.sh
@@ -10,14 +10,14 @@ error() {
     exit 0
 }
 
-# return is used within bash function in order to return the value.
+# return is used within the bash function in order to return the value.
 return() {
     echo "$1"
 }
 
 # set_default function gives the ability to move the setting of default
 # env variable from docker file to the script thereby giving the ability to the
-# user override it durin container start.
+# user to override it during container start.
 set_default() {
     # docker initialized env variables with blank string and we can't just
     # use -z flag as usually.
@@ -41,7 +41,7 @@ set_default() {
 # Set default variables if needed.
 RPCUSER=$(set_default "$RPCUSER" "devuser")
 RPCPASS=$(set_default "$RPCPASS" "devpass")
-DEBUG=$(set_default "$DEBUG" "info")
+DEBUG=$(set_default "$BTCD_DEBUG" "info")
 NETWORK=$(set_default "$NETWORK" "simnet")
 
 PARAMS=""
@@ -66,7 +66,7 @@ if [[ -n "$MINING_ADDRESS" ]]; then
     PARAMS="$PARAMS --miningaddr=$MINING_ADDRESS"
 fi
 
-# Add user parameters to command.
+# Add user parameters to the command.
 PARAMS="$PARAMS $@"
 
 # Print command and start bitcoin node.
diff --git a/docker/docker-compose-bitcoind.yml b/docker/docker-compose-bitcoind.yml
new file mode 100644
index 000000000..42099f9f5
--- /dev/null
+++ b/docker/docker-compose-bitcoind.yml
@@ -0,0 +1,47 @@
+version: '3'
+services:
+    # lightninglabs/bitcoin-core is the base image for bitcoind.
+    # The environment variables default values determined on stage of container
+    # start within starting script.
+    bitcoind:
+      image: bitcoind
+      container_name: bitcoind
+      build:
+        context: bitcoind/
+      volumes:
+        - bitcoin:/data
+      environment:
+        - RPCAUTH
+        - NETWORK
+        - BITCOIND_DEBUG
+      entrypoint: ["./start-bitcoind.sh"]
+
+    lnd:
+      image: lnd
+      container_name: lnd
+      build:
+        context: ../
+        dockerfile: dev.Dockerfile
+      environment:
+        - RPCUSER
+        - RPCPASS
+        - NETWORK
+        - CHAIN
+        - LND_DEBUG
+        - BACKEND=bitcoind
+      volumes:
+        - lnd:/root/.lnd
+      entrypoint: ["./start-lnd.sh"]
+      links:
+        - "bitcoind:blockchain"
+
+volumes:
+  # bitcoin volume is needed for maintaining blockchain persistence
+  # during btcd container recreation.
+  bitcoin:
+    driver: local
+
+  # lnd volume is used for persisting lnd application data and chain state
+  # during container lifecycle.
+  lnd:
+    driver: local
diff --git a/docker/docker-compose.yml b/docker/docker-compose.yml
index 61cd58a5a..ade93e072 100644
--- a/docker/docker-compose.yml
+++ b/docker/docker-compose.yml
@@ -15,7 +15,7 @@ services:
         - RPCUSER
         - RPCPASS
         - NETWORK
-        - DEBUG
+        - BTCD_DEBUG
         - MINING_ADDRESS
       entrypoint: ["./start-btcd.sh"]
 
@@ -30,7 +30,8 @@ services:
         - RPCPASS
         - NETWORK
         - CHAIN
-        - DEBUG
+        - LND_DEBUG
+        - BACKEND=btcd
       volumes:
         - shared:/rpc
         - lnd:/root/.lnd
diff --git a/docker/lnd/start-lnd.sh b/docker/lnd/start-lnd.sh
index 8a291a2e8..7b83c2311 100755
--- a/docker/lnd/start-lnd.sh
+++ b/docker/lnd/start-lnd.sh
@@ -38,15 +38,22 @@ set_default() {
    return "$VARIABLE"
 }
 
+
+# Set the default network and default RPC path (if any).
+DEFAULT_NETWORK="regtest"
+if [ "$BACKEND" == "btcd" ]; then
+    DEFAULT_NETWORK="simnet"
+    DEFAULT_RPCCRTPATH="/rpc/rpc.cert"
+fi
+
 # Set default variables if needed.
-RPCCRTPATH=$(set_default "$RPCCRTPATH" "/rpc/rpc.cert")
+NETWORK=$(set_default "$NETWORK" "$DEFAULT_NETWORK")
+RPCCRTPATH=$(set_default "$RPCCRTPATH" "$DEFAULT_RPCCRTPATH")
 RPCHOST=$(set_default "$RPCHOST" "blockchain")
 RPCUSER=$(set_default "$RPCUSER" "devuser")
 RPCPASS=$(set_default "$RPCPASS" "devpass")
-DEBUG=$(set_default "$DEBUG" "debug")
-NETWORK=$(set_default "$NETWORK" "simnet")
+DEBUG=$(set_default "$LND_DEBUG" "debug")
 CHAIN=$(set_default "$CHAIN" "bitcoin")
-BACKEND="btcd"
 HOSTNAME=$(hostname)
 
 # CAUTION: DO NOT use the --noseedback for production/mainnet setups, ever!
@@ -54,16 +61,36 @@ HOSTNAME=$(hostname)
 # address that is reachable on the internal network. If you do this outside of
 # docker, this might be a security concern!
 
-exec lnd \
-    --noseedbackup \
-    "--$CHAIN.active" \
-    "--$CHAIN.$NETWORK" \
-    "--$CHAIN.node"="$BACKEND" \
-    "--$BACKEND.rpccert"="$RPCCRTPATH" \
-    "--$BACKEND.rpchost"="$RPCHOST" \
-    "--$BACKEND.rpcuser"="$RPCUSER" \
-    "--$BACKEND.rpcpass"="$RPCPASS" \
-    "--rpclisten=$HOSTNAME:10009" \
-    "--rpclisten=localhost:10009" \
-    --debuglevel="$DEBUG" \
-    "$@"
+if [ "$BACKEND" == "bitcoind" ]; then
+    exec lnd \
+        --noseedbackup \
+        "--$CHAIN.active" \
+        "--$CHAIN.$NETWORK" \
+        "--$CHAIN.node"="$BACKEND" \
+        "--$BACKEND.rpchost"="$RPCHOST" \
+        "--$BACKEND.rpcuser"="$RPCUSER" \
+        "--$BACKEND.rpcpass"="$RPCPASS" \
+        "--$BACKEND.zmqpubrawblock"="tcp://$RPCHOST:28332" \
+        "--$BACKEND.zmqpubrawtx"="tcp://$RPCHOST:28333" \
+        "--rpclisten=$HOSTNAME:10009" \
+        "--rpclisten=localhost:10009" \
+        --debuglevel="$DEBUG" \
+        "$@"
+elif [ "$BACKEND" == "btcd" ]; then
+    exec lnd \
+        --noseedbackup \
+        "--$CHAIN.active" \
+        "--$CHAIN.$NETWORK" \
+        "--$CHAIN.node"="$BACKEND" \
+        "--$BACKEND.rpccert"="$RPCCRTPATH" \
+        "--$BACKEND.rpchost"="$RPCHOST" \
+        "--$BACKEND.rpcuser"="$RPCUSER" \
+        "--$BACKEND.rpcpass"="$RPCPASS" \
+        "--rpclisten=$HOSTNAME:10009" \
+        "--rpclisten=localhost:10009" \
+        --debuglevel="$DEBUG" \
+        "$@"
+else
+    echo "Unknown backend: $BACKEND"
+    exit 1
+fi