A Biased View of Bitcoin Mining Efficiency

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

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

In Bitcoin mining terms, that metaphorical undisclosed number in the envelope is called the target hash.

What miners are doing with those tremendous computers and dozens of cooling fans is guessing at the target 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 also 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 that is less than or equal to the target hash is given credit for completing that obstruct, and is given the spoils of 12.5 BTC. .

In theory you could Attain the same aim by rolling a 16-sided expire 64 times to Reach random numbers, but why on earth would you want to do that

The screenshot below, taken by the website Blockchain.info, might help you put all of this information together in a glance. You're looking at a summary of everything which happened when obstruct 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 truly want to find all 1768 of those transactions for this block, go to this webpage and scroll down to the heading"Transactions." .

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

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

You'd have to find a fast mining rig , more realistically, join a mining pool--a group of miners that combine their computing ability and divide the mined bitcoin. Mining pools are similar to those Powerball clubs whose members purchase lottery tickets en masse and agree to discuss 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 1 in 2,874,674,234,416--significantly less than 1 in 2 trillion. .

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The aforementioned site Cryptocompare offers a helpful calculator which permits you to plug in numbers like your hash rate, electricity costs etc., to estimate the costs and benefits.

Mining rewards are paid to the miner who discovers a solution to the puzzle , and the likelihood that a participant is going to be the one to find the solution is equal to the portion of the total mining energy on the network.  Participants which have a small percentage of the mining capability stand a tiny chance of discovering the next block on their own.  For instance, a mining card that one could purchase to get a few thousand dollars would represent less than 0.001% of the network's mining power.  With such a tiny chance at finding the next block, it could be a long time before that miner finds a block, and the difficulty going up makes things even worse.  The miner may never recover their investment.  The answer to index 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 find a steady stream of bitcoin starting the day they trigger their miner.  Statistics on some of the mining pools can be seen on Blockchain.info. .

Sure. As mentioned, the easiest way to get Bitcoin is to buy it on an exchange such as Coinbase.com. Alternately, you can consistently leverage the"pickaxe strategy". This relies on the old saw that during the 1848 California gold rush, the wise investment was not to pan for goldbut rather to make 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. .