The Hell of Burning Blood was created as a side effect of the many decades of atrocities at the Cerro Rico mines. The negative energy of so many deaths both weakened the shroud and create a pool of necrotic power that eventually would find an outlet. But more importantly, the fear and terror that the living souls endured every day in those terrible mines eventually invoked a Fear (via the principles of the The Metaphysics of Shadow) which manifested as an aspect of The Dark called The Buried. This Fear created a new Hell around it, a hell crafted from the fears of being buried alive in the darkness.
Most of the souls of the people that died in the Cerro Rico have been drawn into this hell, deprived of their natural afterlife. Here they labor eternally under the whips of the same task masters that abused them in life.
At first this hell was merely an afterlife that trapped those who died in the Cerro Rico. However, as the shroud was gradually weakened by so many deaths, and the Fear grew stronger, a gate to the hell finally opened into the Waking World, the depths of the Deep Workings. The triggering event for the final tear in the Shroud was the Fear spike followed by the deaths of all those killed in the first major explosion at the mines.
The second explosion and the accompanying dark wave of shadow, with it's associated transformations was the effect of this gateway opening.
During the process of touching the physical world, The Buried chose Overseer Lucius Vetrini as it's avatar and inhabited him. He now rules the Hell of Boiling Blood. In addition, it possessed and granted great powers to many of Lucius' Lieutenants.
Time moves strangely in the Hell, as per the principles of the The Metaphysics of Shadow. The further removed the place is from the Waking World the faster time has passed here. As a result the hell has been in existence for eons to some of those trapped within. However, as the Hell has moved closer to the Waking World over the centuries, time has synchronized, more or less.
The Hell is still rather new however, as Shadowrealms go, and the closing of the mines has cut off the supply of fresh souls to it. As a result, the Hell of Boiling Blood is being invaded by one it's metaphysical neighbors, The Hell of Infernal Machines.