A Write-Up On How Bitcoin Mining Works- Part 3

What Is a "64-Digit Hexadecimal Number"? 

The following is an example of such a number:

0000000000000000057fcc708cf0130d95e27c5819203e9f967ac56e4df598ee

It is easy enough to understand that the number above has 64 digits and probably noticed is that the number consists not just numbers but also letters of the alphabet. The relevant question here is why is it so?

Let’s unpack the word hexadecimal to understand what these letters are doing in the middle of the numbers. It is known that the decimal system means it is base 10, and this, in turn, means every digit of a multi-digit number has 10 possibilities zero through nine.

Whereas on the other hand, hexadecimal means base16 with the word hex derived from the Greek word for six and deca derived from the Greek word for 10. Each digit has 16 possibilities in a hexadecimal system where the numeric system offers only 10 ways of representing numbers zero through nine. This is why you have to stick letters in specifically letters a, b, c, d, e, and f.

In the case of mining Bitcoin, there is no need to calculate the total value of that 64-digit number (the hash). Then what does the 64-digit hexadecimal number have to do with Bitcoin mining?

Firstly do you remember the ELI5 analogy where the number 19 was written in a paper and sealed in an envelope? That metaphorical undisclosed number in the envelope in Bitcoin mining terms is called target hash. 

Guessing at the target hash is what miners are doing with those huge computers and dozens of cooling fans. By randomly generating as many nonces as possible, as fast as possible, miners make these guesses as a nonce is short for number only used once and it is key to generating these 64-digit hexadecimal numbers. A nonce in Bitcoin mining is a 32 bit in size which is much smaller than the hash which is 256 bits. The credit for completing the black is awarded to the first miner whose nonce generates a hash that is less than or equal to the target hash and is awarded the spoils of 12.5 BTC.

What Is The Guess At The Target Hash?

Target hashes mostly all of them begin with zeros, where there are at least eight zeros and up to 63 zeros. While there is no minimum target, there is a maximum target that is set by the Bitcoin protocol. The target cannot be greater than this number: 

00000000ffff0000000000000000000000000000000000000000000000000000

The following are some examples of randomized hashes with the criteria for whether they will lead to success for the miner. 

How is it possible to maximize the chances of guessing the target hash before anyone else does?"

To get a fast mining rig more realistically you can join a mining pool which is a group of coin miners combining their computing power and split the mined Bitcoin. Comparable to those Powerball clubs, mining pools are whose members buy lottery tickets en masse and agree to share any winnings. Mined by pools rather than by individual miners is a disproportionately large number of blocks. 

Its literally just number game in other words where you cannot guess pattern or make any prediction based on previous target hashes. At the time of writing the difficulty level of the most recent block is about 13.69 trillion meaning the chance of any given nonce producing a hash below the target which is one in 13.69 trillion? If you’re working on your own, the odds are not great even with a tremendously powerful mining rig. 

When can it be decided whether Bitcoin will be profitable for me?

Miners certainly have to factor in the costs associated with expensive equipment necessary to stand a chance of solving a hash problem as they also consider the significant amount of electrical power mining rigs utilizing in generating vast quantities of the nonce in search of the solution. Bitcoin mining as it is told is largely unprofitable for most individual miners. Surely, the Cryptocompare site is a helpful calculator allowing you to plug on numbers such s the hash speed, as well as electricity costs, estimate the costs and benefits.

What Are Coin Mining Pools?

The miner who discovers a solution to the puzzle first is rewarded the mining pays and the probability that a participant will be the one to discover the solution equals wholly to the portion of the total mining power on the network. With a small percentage of the mining power, participants stand a very small chance of discovering the next block on their own. A mining card that one could purchase for instance comes with a couple of thousand dollars representing less than 0.001% of the network’s mining power. 

It could be a long time before miners find a block with such a small chance at finding the next block and the difficulty going up makes things even worse. As the miner never recoup their investments, the answer is mining pools operated by third parties coordinating groups of miners. Miners can get a steady flow of Bitcoin by working together in a pool and sharing the payouts among all participants starting the day they activate their miners. 

The Conclusion

The easiest way to acquire Bitcoin as mentioned above is to buy it on an exchange like Coinbase.com whereas alternately you can leverage the pickaxe strategy based on the old saw that during the 1849 California gold rush, the smart investment ewes not to pan gold, but rather make the pickaxes used for mining. To put it in modern terms, it is investing in companies that manufacture pickaxes as in a cryptocurrency context, it is equivalent to a company manufacturing equipment used for Bitcoin mining 

As mentioned above, the easiest way to acquire bitcoin is to buy it on an exchange like Coinbase.com. Alternately, you can always leverage the "pickaxe strategy." This is based on the old saw that during the 1849 California gold rush, the smart investment was not to pan for the gold, but it is rather to make those pickaxes that are used for mining. Thereby putting it in modern terms, those who invest in the companies that manufacture those pickaxes. In the modern era of cryptocurrency context, the pickaxe equivalent would be a company that manufactures equipment used for Bitcoin mining. You may consider looking into companies that make ASICs equipment or GPUs instead, for example.