Submerged arc discharge (SAD) is a simple method to produce carbon nanostructures (CNSs). However, its potential cannot be fully exploited because it generates contaminants and unwanted by-products (CUBPs) that are difficult to eliminate. The formation mechanisms of CNSs and CUBPs were investigated by measuring the correlations between the SAD main parameters (current, voltage, power, anode displacement, and sound emission). It was demonstrated that the SAD takes place in a succession of stable and unstable zones that induce homogeneous and heterogeneous nucleation processes, respectively. In the stable zones, carbon vapor jets are generated and induce the appearance of vortices. Both processes stimulate nucleation. From the measurement of the sound emitted by the jets, the dimensions of the discharge channel were determined. These dimensions match the anode crater size measured by scanning electron microscopy. In the unstable zones, vibrations and thermal stress in the anode intensify. Graphite microparticles are released and act as nucleation centers that induce the formation of CUBPs. While most of the discharge elapses in stable zones, the highest fraction of anode erosion occurs in unstable zones. These results made evident that current theoretical models fail to explain the presence of observed impurities because they do not take into account the influence of vibrations and heterogeneous nucleation. The operation of the synthesis device was simulated, and the results obtained reinforce the aforementioned conclusions. The acoustic emission of the SAD allowed obtaining information on the installation operation for the optimization of its design. Based on this information, recommendations were made for the installation design.