Anup Algorithm 22, at 7: I really appreciate the clarity concerning the algo. Bitcoin mining the hard way: In more detail, to mine mining block, you first collect the new transactions into a block. One place this comes in useful is generating a new bitcoin transaction for a mining pool. It also conveys this message to the pool and the simple.
For the block below, the hash is successful: In the following table q is the percentage of the network controlled by the attacker, P is the probability an attacker could get lucky and override z number of blocks. How mining works Mining requires a task that is very difficult to perform, but easy to verify. This is Bitcoin mining in a nutshell. I really appreciate the clarity concerning the algo. However, there are certain properties of really good hash functions that make them suitable to use in cryptography.
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If all you want to do is run a mining program, there are lots bitcoin. Zamri Algorithm 7, at 7: People in a pool can get edgy if a long time goes without simple payout because of bad bitcoin in mining. It's a never-ending cycle in what seems like no end in sight. If they successfully mine a block, why not submit it themselves so they can mining the full mining reward, rather than splitting it? Or a algorithm can pay a fixed amount per share. Second, because dogecoins are worth much less simple bitcoins, you'll end mining with a much larger number of dogecoins, which seems more rewarding.
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You can study the source and see what they're doing. The official bitcoin client itself has The program itself is pretty simple - the hardest part of the code is computing the difficulty target from bits. The process is almost the same as Bitcoin mining , except you use the scrypt algorithm instead of shad. Bitcoins are mined using a cryptographic algorithm called SHA This algorithm is simple enough to be done with pencil and paper, as I show in this video.
Not surprisingly, this is a thoroughly impractical way to mine. One round of the algorithm takes 16 minutes, 45 seconds which works out to a hash Bitcoin mining uses the hashcash proof of work function; the hashcash algorithm requires the following parameters: In bitcoin the service string is encoded in the block header data structure, and includes a version field, the hash of the previous block, the root hash of The main results besides the recipe for building a SAT-based miner , are: The proposed algorithm potentially gets more efficient with increasing bitcoin difficulty.
This is not the first time SAT solvers are used to Super-dumb and rather useless, but I did this one for demo purposes once: If you are trying to understand how Bitcoin mining software works but can't find a reference implementation that is minimal and easy to understand like me, 2 days ago here's my contribution: Only about lines of code but fully functional, open source and BUTTE - It's not your grandfather's form of mining, but a Bitcoin mining operation expected to set up in Butte will be doing a form of mining in the digital realm.
And if you're able to do that, by finding this solution number, then you get reward with a Bitcoin," said Science and Fri, 2 Feb Whereas the process of actually mining the Bitcoins is a job of the hardware, Bitcoin mining software is essential to connect the miners to the mining pool as well as the blockchain. The software is what passes on the work to miners and gathers back the completed job.
It also conveys this message to the pool and the blockchain. The mining software is designed to run on all operating systems, Linux, Windows, etc.
The Sun, 21 Jan Consequently, their supplies can be altered and manipulated by the authorities. The solution in Bitcoin is to mine the outstanding transactions into a block of transactions approximately every 10 minutes, which makes them official. Conflicting or invalid transactions aren't allowed into a block, so the double spend problem is avoided. Although mining transactions into blocks avoid double-spending, it raises new problems: What stops people from randomly mining blocks?
How do you decide who gets to mine a block? How does the network agree on which blocks are valid? Solving those problems is the key innovation of Bitcoin: It takes an insanely huge amount of computational effort to mine a block, but it is easy for peers on the network to verify that a block has been successfully mined.
This blockchain ensures that everyone agrees on the transaction record. It also ensures that nobody can tamper with blocks in the chain since re-mining all the following blocks would be computationally infeasible. As a side-effect, mining adds new bitcoins to the system. How mining works Mining requires a task that is very difficult to perform, but easy to verify. Bitcoin mining uses cryptography, with a hash function called double SHA A hash takes a chunk of data as input and shrinks it down into a smaller hash value in this case bits.
With a cryptographic hash, there's no way to get a hash value you want without trying a whole lot of inputs. But once you find an input that gives the value you want, it's easy for anyone to verify the hash. Thus, cryptographic hashing becomes a good way to implement the Bitcoin "proof-of-work". In more detail, to mine a block, you first collect the new transactions into a block. Then you hash the block to form a bit block hash value.
If the hash starts with enough zeros [3] , the block has been successfully mined and is sent into the Bitcoin network and the hash becomes the identifier for the block. Most of the time the hash isn't successful, so you modify the block slightly and try again, over and over billions of times.
About every 10 minutes someone will successfully mine a block, and the process starts over. The diagram below shows the structure of a specific block, and how it is hashed. The yellow part is the block header, and it is followed by the transactions that go into the block. The first transaction is the special coinbase transaction that grants the mining reward to the miner. The remaining transactions are standard Bitcoin transactions moving bitcoins around.
If the hash of the header starts with enough zeros [3] , the block is successfully mined. For the block below, the hash is successful: Structure of a Bitcoin block The block header contains a handful of fields that describe the block. The first field in the block is the protocol version. It is followed by the hash of the previous block in the blockchain, which ensures all the blocks form an unbroken sequence in the blockchain. Inconveniently, the hash is reversed in the header.
The next field is the Merkle root , [4] a special hash of all the transactions in the block. This is also a key part of Bitcoin security, since it ensures that transactions cannot be changed once they are part of a block.
The tricky part of mining is finding a nonce that works. The program itself is pretty simple - the hardest part of the code is computing the difficulty target from bits. Each iteration puts the data into a structure, hashes it, and tests the result. The following table shows the hash obtained for selected nonce values. The key point is that each nonce generates a basically-random hash value.
Every so often a "lucky" nonce will generate a hash starting with some zeroes. To get a lot of zeroes, you need to try an exponentially large number of nonces. For this block, the "winning" nonce is Most of the attempts to mine a block will fail entirely - none of the nonce values will succeed. In that case, you need to modify the block slightly and try again. The timestamp can be adjusted which is why the timestamp in mined blocks is often wrong.
New transactions can be added to the block, changing the Merkle hash. The coinbase transaction can be modified - this turns out to be very important for mining pools. Any of these changes will result in totally different hashes, so the nonce values can be tried again. My Python program does about 42, hashes per second, which is a million times slower than the hardware used by real miners.
My program would take about 11 million years on average to mine a block from scratch. Mining is very hard The difficulty of mining a block is astounding. At the current difficulty , the chance of a hash succeeding is a bit less than one in 10 Finding a successful hash is harder than finding a particular grain of sand from all the grains of sand on Earth.
To find a hash every ten minutes, the Bitcoin hash rate needs to be insanely large. Currently, the miners on the Bitcoin network are doing about 25 million gigahashes per second. That is, every second about 25,,,,, blocks gets hashed. I estimate very roughly that the total hardware used for Bitcoin mining cost tens of millions of dollars and uses as much power as the country of Cambodia.
The only purpose of finding a small hash is to make mining difficult, which is fundamental to Bitcoin security. It seems to me that the effort put into Bitcoin mining has gone off the rails recently. Mining is funded mostly by the 25 bitcoin reward per block, and slightly by the transaction fees about 0. Photo by permission of Xiangfu Liu Mining with a pool Because mining is so difficult, it is typically done in mining pools, where a bunch of miners share the work and share the rewards.
If you mine by yourself, you might successfully mine a block and get 25 bitcoin every few years. By mining as part of a pool, you could get a fraction of a bitcoin every day instead, which for most people is preferable. Mining pools use an interesting technique to see how much work miners are doing. They send out a block to be mined, and get updates from a miner whenever a miner gets a partial solution.
Each partial solution proves the miner is working hard on the problem and gives the miner a share in the final reward when someone succeeds in mining the block. For instance, if Bitcoin mining requires a hash starting with 15 zeroes, the mining pool can ask for hashes starting with 10 zeroes, which is a million times easier. Depending on the power of their hardware, a miner might find such a solution every few seconds or a few times an hour.
Eventually one of these solutions will start with not just 10 zeroes but 15 zeroes, successfully mining the block and winning the reward for the pool. In that case, the pool operator sends out new data and the miners just start mining the new block. People in a pool can get edgy if a long time goes without a payout because of bad luck in mining. The communication between a pool and the miners Next I'll look in detail at the communication between a miner and the mining pool.
The communication between the pool and the miners is interesting. The pool must efficiently provide work to the miners and collect their results quickly. The pool must make sure miners aren't duplicating work. And the pool must make sure miners don't waste time working on a block that has already been mined.
An important issue for mining pools is how to support fast miners. The nonce field in the header is too small for fast miners since they will run through all the possible values faster than the pool can send blocks.
The solution is to allow miners to update the coinbase transaction so they can put additional nonces there. This makes mining more complicated since after building the coinbase transaction the miner must recompute the Merkle hash tree and then try mining the block. I'm going to look at the Stratum mining pool protocol that is used by many pools. Some alternative protocols are the Getwork and Getblocktemplate protocols.
The following Python program uses the Stratum protocol to make a mining request to the GHash. IO mining pool and displays the results. This program is a minimal demonstration; don't use this code for real mining. The second line is a mining. With a difficulty of 16, I can get a share every hour or two on my PC. In comparison, the Bitcoin mining difficulty is 3,,, That's why people join pools. The third line is a mining. This message defines that block for us to mine.
There's a lot of data returned under "params", so I'll explain it field by field. Most of the fields are used in the block header. The prevhash is the hash of the previous block. Apparently mixing big-ending and little-endian isn't confusing enough so this hash value also has every block of 4 bytes reversed.
The version is the block protocol version. The nbits indicates the difficulty [3] of the block. The timestamp ntime is not necessarily accurate. The coinb1 and coinb2 fields allow the miner to build the coinbase transaction for the block. This transaction is formed by concatenating coinb1 , the extranonce1 value obtained at the start, the extranonce2 that the miner has generated, and coinb2.
The result is a transaction in Bitcoin protocol. After receiving this data, the miner can start generating coinbase transactions and mining blocks. The diagram below shows how the combination of these four values forms a complete transaction, with the nonces in the middle of the coinbase script.
The block below is slightly different from the one described earlier. A coinbase transaction generated by the GHash. A normal transaction transfers bitcoins from inputs usually source addresses to outputs usually destination addresses.
A coinbase transaction is generating new bitcoins out of thin air, rather than doing a transfer, so the transaction is slightly different. The previous output hash and index are irrelevant for the coinbase transaction. In a coinbase transaction, this is irrelevant, so instead the field is called the coinbase and is mostly arbitrary data.
The value field in the coinbase transaction is the 25 bitcoin mining reward plus any bitcoins left over from the other transactions the left over bitcoins are treated as mining fees. Finally, both regular transactions and the coinbase transaction use the second script scriptPubKey to specify the recipients of the bitcoins.
Because of the structure of the Merkle hash explained below , this allows the hash for the entire set of transactions to be recomputed easily. Finally, the block header is built from the new Merkle hash and the data provided by the pool, and the hash algorithm can iterate over the nonce values in the header, just like the Python program earlier.
Once all the nonce values have been tried, the miner increments the extranonce2, generates a new coinbase transaction and continues. A Bitcoin block header Informing the mining pool of success The difficulty [3] for a mining pool is set much lower than the Bitcoin mining difficulty fewer leading zeros required , so it's much easier to get a share. When a block is hashed to the pool's difficulty, you send a simple JSON message to the mining pool to submit it: This information is sufficient for the pool to build the matching coinbase transaction and header, and verify the block.
If the hash meets the pool difficulty, you get a share. If the hash also meets the much, much harder Bitcoin difficulty, the block has been successfully mined. In this case the pool submits the block to the Bitcoin network and everyone with shares gets paid accordingly. Mining for fun and profit If you're curious about mining, it's surprisingly easy to try out mining yourself, although you'll be lucky to earn even a penny.
Just create an account at a mining pool such as BTC Guild , download mining software such as cpuminer minerd. For a pool with low difficulty, you should get shares in a few minutes; in a pool with a higher difficulty such as GHash. IO , it may take you an hour or two to get a share, which is more frustrating. I got lucky and it only took me a minute to successfully mine a share. A minute later someone successfully mined a block, so the pool tells everyone to start over. Another block was mined less than a minute after that - although blocks are 10 minutes apart on average, the times can vary widely.
It took 12 minutes for my next share to be generated. After running for a while, I earned 0. Bitcoin mining is an "arms race".
Originally people could mine with the CPU on a regular PC, but that hasn't been practical for a while. Next mining was offloaded to GPUs. Now, mining is done with special-purpose ASIC hardware, which is rapidly increasing in speed.
For-profit mining is very competitive, and you'll need to look elsewhere for information. If you want to try out mining just for fun, you may prefer to mine a currency such as Dogecoin rather than Bitcoin. First, Dogecoin uses a different hash algorithm which doesn't work well with ASIC hardware, so you're not as disadvantaged compared to professional miners. Second, because dogecoins are worth much less than bitcoins, you'll end up with a much larger number of dogecoins, which seems more rewarding.
For Dogecoin mining, I used the dogepool. The process is almost the same as Bitcoin mining, except you use the scrypt algorithm instead of shad. There are many other alternative cryptocurrencies to choose from. Notes and references [1] Bitcoin mining seems like a NP nondeterministic polynomial problem since a solution can be quickly verified.
However, there are a couple of issues with making this rigorous. Thus, you'd need to consider an extended mining scheme where the difficulty can go to infinity. Second, mining would need to be turned into a decision problem - e. Note that if you can solve that problem, you can rapidly find the nonce with binary search.
With these changes, the mining problem is in NP. The next question is if it is NP-complete. That is, can an arbitrary NP-complete problem be turned into a mining problem? I believe that is currently unknown. Has the problem of conflicting transactions has just been replaced by the problem of conflicting blocks? The rule is that only the longest chain of valid blocks is used, and the other branch is ignored.
Thus, when a miner extends the chain with one of the two parallel blocks, the other block becomes an orphan block and is ignored. Orphan blocks are fairly common , roughly one a day. For this reason, the somewhat arbitrary recommendation is to wait for six confirmations about one hour before considering a transaction solidly confirmed.
A valid block must have a hash below a target value. Since the target starts with a bunch of zeros, so will the valid hash. There are two different hard-to-understand ways of representing the target. The second, difficulty is the ratio between a base target and the current target. A difficulty of N is N times as difficult as this base target. The base target is 0xFFFF , which corresponds to approximately 1 in 2 32 or 1 in 4.
Difficulty changes approximately every two weeks to keep the block hash rate around 1 every 10 minutes. Multiplying my PC's performance by the current difficulty shows it would take my PC about 35, years to mine a block. The pool difficulty is important when using a mining pool. IO has a minimum difficulty of 16 on the other hand, so I only get a share every hour or two on the average. My overall earnings would be similar either way, since the shares per block scale inversely with the difficulty.
The Merkle root is the root of a binary Merkle tree. The idea is to start with all the transaction hashes. Pairs of hashes are hashed together to yield new hashes.
The process is repeated on the new list of hashes and continues recursively until a single hash is obtained. This final root hash is the value used when computing the block. See Wikipedia for more details. In the Merkle tree, each transaction is hashed.