A mining pool is a group of miners who have shared their hashing resources to solve blocks together and the rewards are then distributed amongst the members. Let's say Bob runs a Bitcoin mining farm with 1% of the Bitcoin network hash rate. His machines only find, on average, one out of every 100 blocks. Bob becomes impatient and wants more frequent payouts. He joins a mining pool with 20% of the network hash rate. Instead of getting paid on average once per 100 blocks, Bob now receives smaller but more frequent payouts every five blocks.
The term "hashing" means how quickly your hardware is processing data from the Blockchain and solving the complex mathematical equations that are required to earn bitcoins.
Bitcoin MiningMining is the process of spending computing power to process transactions, secure the network, and keeps everyone in the system synchronized together. It can be perceived like the Bitcoin data center except that it has been designed to be fully decentralized with miners operating in all countries and no individual having control over the network. This process is referred to as "mining" as an analogy to gold mining because it is also a temporary mechanism used to issue new bitcoins. Unlike gold mining, however, Bitcoin mining provides a reward in exchange for useful services required to operate a secure payment network. Mining will still be required after the last bitcoin is issued.
Anybody can become a Bitcoin miner by running Bitcoin mining software and Bitcoin mining modules with specialized Bitcoin mining hardware. Mining software listens for transaction broadcasts through the peer-to-peer network and performs appropriate tasks to process and confirm these transactions. Bitcoin miners perform this work because they can earn transaction fees paid by users for faster transaction processing, and newly created bitcoins issued into existence according to a fixed formula. For new transactions to be confirmed, they need to be included in a block along with a mathematical proof of work. Such proofs are very hard to generate because there is no way to create them other than by trying billions of calculations per second. This requires miners to perform these calculations before their blocks are accepted by the network and before they are rewarded. As more people start to mine, the difficulty of finding valid blocks is automatically increased by the network to ensure that the average time to find a block remains equal to 10 minutes. As a result, mining is a very competitive business where no individual miner can control what is included in the block chain.
Isn't Bitcoin mining a waste of energy? Spending energy to secure and operate a payment system is hardly a waste. Like any other payment service, the use of Bitcoin entails processing costs. Services necessary for the operation of currently widespread monetary systems, such as banks, credit cards, and armored vehicles, also use a lot of energy. Although unlike Bitcoin, their total energy consumption is not transparent and cannot be as easily measured. The total Bitcoin network hash rate is publicly available and can be used to estimate the network's total electricity costs. An optimally efficient mining network is one that isn't actually consuming any extra energy. While this is an ideal, the economics of mining are such that miners individually strive toward it. How does m
These abbreviations stand for the hashing power that your miner is generating. MH/s stands for megahash per second and GH/s stands for gigahash per second. There is a direct correlation between how fast your miner works and how profitable it will be.