The Buzz on Bitcoin Mining Efficiency

If you're mining Bitcoin, you do not need to calculate the entire value of that 64-digit number (the hash). I repeat: You do not need to figure the entire value of a hash.

Remember that ELI5 analogy, in which I wrote the number 19 on a piece of paper and put it in a sealed envelope

In Bitcoin mining conditions, that metaphorical undisclosed number in the envelope is known as the objective hash.

What miners are doing with these huge computers and dozens of cooling fans is guessing in the target hash. Miners create these guesses by randomly generating as many"nonces" as you can, as quickly as possible. A nonce is short for"number only used once," and the nonce is the key to generating these 64-bit hexadecimal numbers I keep talking about.

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The first miner whose nonce generates a hash which is less than or equal to the target hash is given credit for completing that block, and is given the spoils of 12.5 BTC. .

In theory you can achieve the same aim by rolling a 16-sided expire 64 times to arrive at random numbers, but why on earth do you want to do that

The screenshot below, taken by the website Blockchain.info, might help you put all of this information together at a glance. You're looking at a summary of everything that happened when block 490163 was mined. The nonce that generated the "winning" hash was 731511405. The goal hash is shown on top.

As you see here, their contribution to the Bitcoin community is that they confirmed 1768 transactions for this cube. If you really want to see all 1768 of those transactions for this block, then go to this page and scroll down to the heading"Transactions." .

There is no minimum goal, but there's a maximum target determined by the Bitcoin Protocol. No target can be greater than this number:

Here are some examples of randomized hashes and also the criteria for if they will lead to success for your miner:

You would have to get a fast mining rig or, more realistically, join a mining pool--a group of miners who combine their computing power and divide the mined bitcoin. Mining pools are somewhat comparable to those Powerball clubs whose members buy lottery tickets en masse and agree to share any winnings. A disproportionately large number of blocks are mined by pools rather than by individual miners. .

In other words, it's literally only a numbers game.  You cannot guess the pattern or make a prediction based on previous goal hashes. The difficulty level of the most site recent block at the time of writing is 2,874,674,234,416, i.e. the chance of any given nonce producing a hash below the goal is just 1 in 2,874,674,234,416--less than 1 in two trillion. .

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The aforementioned website Cryptocompare delivers a helpful calculator that allows you to plug in numbers like your hash rate, power prices etc. to gauge the costs and benefits.

Mining benefits are paid to the miner who discovers a solution to the puzzle first, and the probability that a participant will be the one to discover the solution is equal to the portion of the total mining power on the network.  Participants which have a small percentage of their mining capability stand a tiny chance of discovering the next block on their own.  For instance, a mining card that one could buy to get a few thousand bucks would represent less than 0.001% of their network's mining power.  With such a small chance at finding the next block, it could be a long time before that miner finds out a block, and also the problem going up makes things even worse.  The miner may never recover their investment.  The answer to this predicament is mining pools.  Mining pools are operated by third parties and coordinate groups of miners.  By working together in a pool and sharing the payouts amongst participants, miners can find a steady flow of bitcoin starting the day they activate their miner.  Statistics on some of the mining pools can be seen on Blockchain.info. .

Sure. As discussed, the easiest way to acquire Bitcoin is to purchase it on an exchange like browse around these guys Coinbase.com. Alternately, you can consistently leverage the"pickaxe plan". This is based on the old saw that during the 1848 California gold rush, the smart investment was not to pan for goldbut rather to create the pickaxes used for mining.

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In a crypto context, the pickaxe equivalent would be a company that manufactures equpiment used for Bitcoin mining. You can look into companies that make ASICs miners or GPU miners. .