Bitcoin Mining Efficiency - The Facts

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If you are mining Bitcoin, you do not need to calculate the total value of that 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 newspaper and put it in a sealed envelope

In Bitcoin mining conditions, that metaphorical undisclosed number in the envelope is known as the target 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 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 equivalent to the target hash is awarded credit for completing that obstruct, and is given 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 this

 

 

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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 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 truly want to find all 1768 of these transactions for this block, go to this webpage and scroll down to the heading"Transactions." .

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

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

You would have to get a speedy mining rig , more realistically, join a mining pool--a bunch of miners that combine their computing ability and split the mined bitcoin. Mining pools are somewhat similar to people Powerball clubs whose members purchase lottery tickets en masse and agree to share any winnings. A disproportionately high number of cubes are mined by pools rather than by individual miners. .

In other moved here words, it's literally just a numbers game.  You cannot guess the pattern or make a prediction based on preceding goal 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 1 in 2,874,674,234,416--less than 1 in 2 trillion. .

 

 

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The aforementioned site Cryptocompare offers a very helpful calculator that permits you to plug in numbers such as your hash rate, power costs etc., to gauge the costs and benefits.

Mining rewards are paid to the miner who discovers a solution to the puzzle first, and also the likelihood that a participant is going to be the one to discover the solution is equivalent to the portion of the total mining power on the network.  Participants which have a small percentage of their 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 bucks would represent less than 0.001percent of their network's mining energy.  With such a small chance at finding the next block, it might be a long time before that miner finds a block, and also the difficulty going up makes things even worse.  The miner may never recover their investment.  The answer to this problem is mining pools.  Mining pools are run 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 stream of bitcoin starting the afternoon they trigger their miner.  Statistics on some of the mining pools can be seen on Blockchain.info. .

Sure. As discussed, the easiest 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 wise investment was not to pan for goldbut rather to make 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 which make ASICs miners or GPU miners. .

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