Cut the denim in strips, depending on how thick you want the rug. Sew or attach three of the strips at the top and braid them. Continue until you have several yards of braided denim, attaching the sewn top to the end of the last braid as you go. After you have several yards, tack them in a circle using a hand basted stitch on the bottom side. Add more braided denim to get the size rag rug you desire. It can be circular or oval shaped to fit your room or area, just tack it in the shape you desire.
This may help: https://www.hometalk.com/4255989/diy-shag-rug-dorm-decor-backtoscool
YouTube has videos on denim rugs galore.... https://www.youtube.com/results?search_query=made+a+denim+rug+from+old+jeans
Here is how you can make denim yarn from old jeans, then you can crochet the yarn into a rug of any size. https://www.hometalk.com/13443133/how-to-make-denim-yarn-from-old-jeans