The smart Trick of Bitcoin Mining Efficiency That Nobody is Talking About

If you are mining Bitcoin, you do not need to figure the total value of that 64-digit number (the hash). I repeat: You do not need to figure the total 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 called the target hash.

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

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The first miner whose nonce generates a hash that is less than or equal to the target hash is awarded 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 die 64 times to arrive at random numbers, but why on earth do you want to do this

The screenshot below, taken by the site Blockchain.info, might help you put all of this information together in a glance. You are looking at a summary of everything which happened when block #490163 was mined. The nonce that generated the "winning" hash was 731511405. The goal hash is shown on the 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 these transactions for this block, 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 achievement for the miner:

You would need to get a speedy mining rig or, more realistically, join a mining pool--a bunch of miners who combine their computing ability and split the mined bitcoin. Mining pools are somewhat comparable to those Powerball clubs whose members purchase lottery tickets en masse and visit this website consent to discuss any winnings. A disproportionately high number of cubes are mined by pools rather than by individual miners. .

In other words, it is literally just a numbers game.  You cannot imagine the pattern or make a prediction based on previous 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 beneath the target is just 1 in 2,874,674,234,416--significantly less than 1 in 2 trillion. .

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The aforementioned site Cryptocompare delivers a very helpful calculator that allows you to plug in numbers such as your hash speed, electricity costs etc. to gauge the costs and benefits.

Mining rewards are paid to the miner who discovers a solution to the puzzle , and also the likelihood that a participant is going to be the one to discover the solution is equivalent to the portion of the entire mining energy on the network.  Participants check my source with a small percentage of the mining capability stand a very small chance of discovering the next block on their own.  For instance, a mining card that one could buy to get a few thousand dollars would represent less than 0.001percent of their network's mining power.  With such a tiny chance at finding the next block, it could be a long time before that miner finds out a block, and the difficulty going up makes things even worse.  The miner may never recoup 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 afternoon 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 purchase it on an exchange like Coinbase.com. Alternately, you can consistently leverage the"pickaxe plan". This relies on the old saw that during the 1848 California gold rush, the smart investment was not to pan for goldbut instead to create the pickaxes used for mining.

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