The Ultimate Guide To Bitcoin Mining Efficiency

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

What miners are doing with these huge computers and dozens of cooling fans is guessing in the hash. Miners make these guesses by randomly generating as many"nonces" as possible, as fast as possible. A nonce is short for"number only used once," and also the nonce is the secret to generating these 64-bit hexadecimal numbers I keep talking about.

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The primary miner whose nonce generates a hash that is less than or equal to the target hash is awarded credit for completing that block, and is given the spoils of 12.5 BTC. .

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

The screenshot below, taken by the site Blockchain.info, might enable you to put all of this information together at a glance. You are looking at a list of everything which happened when block 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 block. If you really want to see all 1768 of these transactions for this block, go to this webpage and scroll down to the heading"Transactions." .

There is no minimum target, 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 if they will lead to achievement for the miner:

You would have to find a fast mining rig or, more realistically, join a mining pool--a bunch of miners who combine their computing ability and split the mined bitcoin. Mining pools are similar to people Powerball clubs whose members purchase lottery tickets en masse and consent to share any winnings. A disproportionately large number of blocks are mined by pools rather than by individual miners. .

In other words, it is literally only 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 below the goal is 1 in 2,874,674,234,416--less than 1 in two 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 speed, power prices etc. to gauge 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 will be the one to find the solution is equivalent to the portion of the total mining energy on the network.  Participants which have a small percentage of their mining power 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 bucks would represent less than 0.001percent of the network's mining energy.  With such a small 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 recoup their investment.  The answer to this problem is mining pools.  Mining pools are operated by third parties and coordinate groups of miners.  By working together in a pool and sharing the payouts amongst participants, miners can get a steady flow of bitcoin starting the day they activate 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 check here to purchase it on an exchange such as Coinbase.com. Alternately, you can consistently leverage the"pickaxe plan". This is based on the old saw that during the 1848 California gold rush, the Get the facts smart investment was not to pan for goldbut instead to create 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 start looking into companies which make ASICs miners or GPU miners. .