Bitcoin Tutorials - Herong's Tutorial Notes - Version 1.01, by Dr. Herong Yang
What Is Bitcoin Mining
This section describes what is Bitcoin Mining.
Bitcoin mining is the process of building a new block of transactions to be added to the end of the Bitcoin blockchain.
Building a new block consists of the following steps:
1. Selecting a list of pending transactions to be included in the block. There are two main considerations in this step:
2. Adding a coinbase transaction into the selected transactoin list. The coinbase transaction is the transaction for the miner to collect the current block mining reward and the total of all transactoin fees in the block. As of 2018, the block mining reward is 12.5 BTC, about $125,000 USD.
3. Building the block header with the hash of the last block in the blockchain, the Merkle root hash of all selected transactions, a timestamp and an arbitrary nonce number.
4. Changing the nonce number repeatedly, until the hash value of the block header is less than or equal to the current blockchain target value (the cryptographic difficulty requirement). As of 2018, blockchain target value is 0x0000000000000000007fffffffffffffffffffffffffffffffffffffffffffff, which has 73 leading 0s if expressed in binary format.
5. Racing against other miners to submit your new block to the Bitcoin network first.
As you can see from these steps, building a new block of transactions is like mining Bitcoins from a very long list of nonce numbers. You keep mining through nonce numbers until you find one that produces a qualified hash. Then you can claim your reward of 12.5 BTC Bitcoins.
On average, a minor needs to try 2**72 nonce numbers to find one that produces a qualified hash. But if you are extremely lucky, maybe the first nonce number you try will produces a qualified hash to win the $125,000 USD prize.
Last update: 2018.
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