Comment on Bitcoin mining is no longer profitable

hperrin@lemmy.ca ⁨3⁩ ⁨days⁩ ago

By design, it’s supposed to be barely profitable, so it makes sense it would cross that boundary once in a while. Then some miners stop, the difficulty is adjusted automatically, and it becomes profitable again. It’s actually a pretty interesting strategy.

Basically the difficulty depends on how many miners there are on the network. More miners = more difficult. Fewer miners = less difficult. The “difficulty” is just how “lucky” you have to be to hit a successful hash on a block. The block’s hash is based on the previous block + all the transactions you include in your block + a random number you add. If the hash ends in a certain number of zeroes, you have a successful block you can add to the chain, and you’re rewarded with some brand new coin in your wallet (you include that in the transactions in your block).

The amount of new coin constantly goes down as the chain gets longer, until it hits zero and mining doesn’t create new coin. Then, you would charge a fee for including someone’s transaction (a lot of miners already charge a fee). The more zeroes required at the end of the hash, the “harder” it is to mine. The network automatically adjusts how many zeroes are required to keep new blocks being added at a roughly constant rate.

So, fewer miners would mean blocks are being added too slowly at the current difficulty, and the network adjusts to make it easier to hit a successful hash.

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