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In 2009, it was 50. In 2013, it was 25, in the time of writing it is 12.5, and sometime in the center of 2020 it will halve to 6.25. .

At this speed of halving, the entire number of bitcoin in circulation will approach a limit of 21 million, making the currency more scarce and valuable over time but also more costly for miners to make.

Here is the catch. In order to get bitcoin miners to really earn bitcoin from verifying transactions, two things must happen. To begin with, they need to verify 1 megabyte (MB) worth of transactions, which can theoretically be as little as 1 transaction but are far more often a few thousand, depending on how much data each transaction stores.

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Second, in order to put in a block of transactions to the blockchain, miners should fix a complex computational science difficulty, also called a"proof of labour " What they're doing is trying to think of a 64-digit hexadecimal number, called a"hash," that's less than or equivalent to the target hash.

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In other words, it's a bet. .

The difficulty level of the most recent block at the time of writing is about 7,184,404,942,701. That is, the chance of a pc producing a hash beneath the target is just 1 in 7,184,404,942,701 less than 1 in seven trillion. That amount is corrected every 2016 blocks, or roughly every 2 weeks, with the aim of keeping rates of mining constant.

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The opposite is also correct. If computational power has been taken from this network, the problem adjusts downward to earn mining easier. .

"Say I tell three friends that I'm thinking of a number between 1 and 100, and that I write that number on a sheet of paper and seal it in an envelope. My friends don't need to guess the exact number, they simply have to be the first person to figure any number that's less than or equal to this number I am thinking of.

"Let us say I'm thinking of the number 19. If Friend A guesses 21, they shed because 21>19. If Friend B supposes 16 and Friend C supposes 12, then they've both theoretically arrived at viable answers, since 16<19 and 12<19. There is no'extra credit' for Friend B, even though B's answer was closer to the goal answer of 19. .

"Now imagine that I pose the'guess what number I'm thinking of' question, however I'm not asking only 3 friends, and I'm look at here not thinking of a number between 1 and 100. Rather, I am asking millions of prospective miners and I'm thinking about a 64-digit hexadecimal number. Now you see that it's going to be extremely hard to guess the ideal answer." .

If 1 in 7 trillion doesn't sound hard enough as is, here's the catch to the catch. Not only do bitcoin miners have to think of the right hash, they also must be the very first to do it.

Because bitcoin mining is essentially guesswork, arriving at the right answer before another miner has everything to do with how fast your computer can create hashes. Only a decade ago, bitcoin miners could be performed competitively on normal desktops. As time passes, however, miners realized that pictures cards commonly used for video games tend to be more effective at mining than desktops and graphics processing units (GPU) came to dominate the match.

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These can run from \$500 into the tens of thousands. .

Nowadays, bitcoin mining is so aggressive that it can only be done profitably with the latest up-to-date ASICs. When using desktop computers, GPUs, or older models of ASICs, the cost of energy consumption actually surpasses the revenue generated. Even with the newest unit at your disposal, one computer is rarely enough to compete with what what miners call"mining pools." .

An mining pool is a group of miners that combine their computing ability and divide the mined bitcoin between participants. A disproportionately high number of blocks are mined by pools rather than by individual miners. In July 2017, mining pools and companies represented roughly 80% to 90% of bitcoin computing power. .