The Facts About Bitcoin Mining Efficiency Uncovered

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, where I composed 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 these huge computers and dozens of cooling fans is guessing at the target hash. Miners create 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 first miner whose nonce generates a hash which is less than or equivalent 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 this

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

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

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

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

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

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The aforementioned website Cryptocompare delivers a very helpful calculator which permits you to plug in numbers such as your hash speed, electricity 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 is going to be the one to find 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 very small chance of discovering the next block on their own.  For instance, a mining card that one could purchase for a couple 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 might 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 straight from the source 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 day they trigger their miner.  Statistics on some of the mining pools can be seen on Blockchain.info. .

Sure. As discussed, the simplest way to acquire Bitcoin is to purchase it on an exchange like Coinbase.com. Alternately, you can always leverage the"pickaxe image source plan". This relies 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.

8 Easy Facts About Bitcoin Mining Efficiency Explained

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. .