Bitcoin Mining Efficiency - An Overview

If you're mining Bitcoin, you do not need to figure the entire value of the 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 wrote the number 19 on a piece of paper 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 tremendous computers and dozens of cooling fans is guessing in 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 secret to generating these 64-bit hexadecimal numbers I keep talking about.

Unknown Facts About Great Wallets

The primary miner whose nonce generates a hash that 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 Attain 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 enable you to put all of this information together at a glance. You're looking at a list of everything that happened when obstruct #490163 was mined. The nonce that generated the "winning" hash was 731511405. The target 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 see all 1768 of those transactions for this block, then go to this page and scroll down to the heading"Transactions." .

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

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

You would need to get a fast mining rig or, more realistically, join a mining pool--a bunch of miners that combine their computing power and divide the mined bitcoin. Mining pools are similar to those Powerball clubs whose members buy lottery tickets en masse and agree to share any winnings. A disproportionately high number of blocks are mined by pools rather than by individual miners. .

In other words, it's literally just a numbers game.  You cannot guess 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--less than 1 in 2 trillion. .

The Peer To Peer Bitcoin Statements

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

Mining benefits 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 find the solution is equal to the portion of the entire mining energy on the network.  Participants with a small percentage of the mining power 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 0.001percent 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 out a block, and the problem 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 this of miners.  By working together in a pool and sharing the payouts amongst participants, miners can get a steady stream of bitcoin starting the afternoon that 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 always leverage the"pickaxe plan". This is based on the old saw that during the 1848 California gold rush, the wise investment was not to pan for goldbut rather to create the pickaxes taken for mining.

The Ultimate Guide To Bitcoin Mining Efficiency

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. .