Coin Mining Hardware Fundamentals Explained

If you are mining Bitcoin, you do not need to figure the total value of the 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 wrote 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 those huge computers and dozens of cooling fans is guessing in the target hash. Miners create these guesses by randomly generating as many"nonces" as possible, as quickly as possible. A nonce is short for"number only used once," and also the nonce is the key 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 given credit for completing that block, and is awarded the spoils of 12.5 BTC. .

In theory you can achieve the Exact Same goal by rolling a 16-sided die 64 days to Reach random numbers, but why on earth would you want to do this

The screenshot below, taken by the site Blockchain.info, might help you put all of 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 top.

As you see here, their contribution into 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's a maximum goal set by the Bitcoin Protocol. No target can be greater than this number:

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

You'd have to get a speedy 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 somewhat comparable to those Powerball clubs whose members purchase lottery our website tickets en masse and agree to share any winnings. A disproportionately large number of cubes 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 beneath the goal is just 1 in 2,874,674,234,416--less than 1 in two trillion. .

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The aforementioned website Cryptocompare offers a helpful calculator which allows you to plug in numbers like your hash rate, electricity prices etc., to estimate 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 is going to be the one to discover the solution is equivalent to the portion of the entire mining power on the network.  Participants with a small percentage of the mining power 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 dollars would represent less than 0.001% 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 also the problem going up makes things even worse.  The miner may never recoup their investment.  The answer to this problem 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 day they trigger their miner.  Statistics on some of the mining pools can be seen on Blockchain.info. .

Sure. As discussed, the easiest way to acquire Bitcoin is to purchase it on an exchange such as Coinbase.com. Alternately, you can always leverage the"pickaxe strategy". 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 make the pickaxes used 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. .