How Coin Mining Hardware can Save You Time, Stress, and Money.

If you're 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 calculate the entire value of a hash.

Remember that ELI5 analogy, in which I composed the number 19 on a piece of paper and put it in a sealed envelope

In Bitcoin mining conditions, 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 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 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 which is less than or equivalent to the target hash is awarded credit for completing that block, and is awarded the spoils of 12.5 BTC. .

In theory you could achieve the Exact Same aim by rolling a 16-sided expire 64 times 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 this information together at a glance. You're looking at a list 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 that they confirmed 1768 transactions for this cube. If you really want to find all 1768 of these 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 target determined by the Bitcoin Protocol. No goal can be greater than this number:

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

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

In other words, it is literally only a numbers game.  You cannot imagine 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 target is just 1 in 2,874,674,234,416--less than 1 in 2 trillion. .

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The aforementioned website Cryptocompare offers a very helpful calculator that allows you to plug in numbers like your hash speed, power prices etc., to gauge 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 will be the one to discover the solution is equivalent to the portion of the total mining power on the network.  Participants with 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 few thousand bucks would represent less than 0.001% of their network's mining power.  With such a small chance at finding the next block, it could be a long time before that miner finds 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 operated by third parties and coordinate groups of miners.  By working together in a swimming pool and sharing the payouts amongst participants, miners can find a steady flow 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 acquire 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 anchor rush, the wise investment was not to pan for gold, but instead to create the pickaxes used for mining.

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