The Facts About Bitcoin Mining Efficiency Revealed

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

Remember that ELI5 analogy, in which I composed 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 those tremendous computers and dozens of cooling fans is guessing at the target hash. Miners create these guesses by randomly generating as many"nonces" as possible, 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 that is less than or equal to the target hash is awarded credit for completing that obstruct, and is awarded the spoils of 12.5 BTC. .

In theory you could Attain the Exact Same goal by rolling a 16-sided die 64 times to arrive at random numbers, but why on earth do you want to do that

The screenshot below, taken from the website Blockchain.info, might help you put all this information together at a glance. You're looking at a summary of everything which 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 to the Bitcoin community is that they confirmed 1768 transactions for this block. If you truly want to find all 1768 of those transactions for this block, then 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 goal can be higher than this number:

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

You'd have to get 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 buy lottery tickets en masse and agree to discuss any winnings. A disproportionately large number of cubes are mined by pools rather than by individual miners. .

In other words, it's literally only a numbers game.  You cannot guess 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 1 in 2,874,674,234,416--less than 1 in two trillion. .

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The aforementioned website Cryptocompare offers a very helpful calculator which permits you to plug in numbers such as your hash speed, electricity prices etc. to gauge the costs and benefits.

Mining rewards are paid into the miner who discovers a solution to the puzzle first, and also the likelihood that a participant will 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 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 for a couple site web thousand bucks would represent less than 0.001percent of their network's mining energy.  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 problem going up makes things even worse.  The miner may never recoup their investment.  The answer to this predicament is mining pools.  Mining pools are run 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 afternoon that 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 buy it on an exchange such as 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 make the pickaxes used for mining.

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