Mining – Pooling our resources

In an earlier article on mining, I mentioned that the Bitcoin system periodically changes the difficulty of finding a block to ensure that the average times between blocks is approximately 10 minutes. That means that under normal circumstances, a block is found every 10 minutes on average, an average of 6 blocks are found per hour, 144 blocks per day and 1008 per week. Once there are sufficiently many miners, this means that a single miner may have to wait a long time before he finds a block and gets the reward. This turns mining more and more into a lottery and less of a relatively constant income stream to offset the costs. Fortunately, a system known as a ‘mining pool’ was developed where miners can collaborate on finding a block and are paid out a portion of the block reward. This article describes how pool mining works.
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Mining – Why do we need it and how does it work?

Mining is one of the more mysterious aspects of Bitcoin and other cryptocurrencies. It is often described by vague statements such as “miners try to find new coins”, “miners solve puzzles for coin rewards”, “miners verify transactions”, etc… This is coupled with a sentiment among new  Bitcoin-users that mining is *the* way to obtain bitcoins and that obtaining coins through mining is somehow one of the main purposes of a cryptocurrency. In this post, I will delve into the details of the mining process, discuss its purpose and how it works.

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