A Biased View of Bitcoin Mining Efficiency

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If you are mining Bitcoin, you do not need to figure the total value of the 64-digit number (the hash). I repeat: You do not need to calculate 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 at the hash. Miners make these guesses by randomly generating as many"nonces" as you can, as fast 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 primary miner whose nonce generates a hash that is less than or equal to the target hash is given credit for completing that block, and is awarded the spoils of 12.5 BTC. .

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

 

 

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The screenshot below, taken by the site Blockchain.info, might enable you to put all of this information together at a glance. You are looking at a list of everything which happened when block 490163 was mined. The nonce that generated the "winning" hash was 731511405. The target hash is shown on top.

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

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

Here are some examples of randomized hashes and the standards for whether they will lead to success for your miner:

You would need to find a fast mining rig , more realistically, join a mining pool--a group of miners who combine their computing power and split the mined bitcoin. Mining pools are comparable to people Powerball clubs this contact form whose members purchase lottery tickets en masse and consent 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 imagine the pattern or make a prediction based on preceding target hashes. The difficulty level of the most 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 2 trillion. .

 

 

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

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

Sure. As mentioned, the simplest way to get Bitcoin is to buy it on an exchange like Coinbase.com. Alternately, you can always leverage the"pickaxe strategy". This moved here is based on the old saw that during the 1848 California gold rush, the wise investment was not to pan for goldbut instead to create the pickaxes taken for mining.

 

 

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

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