Bitcoin Forum

How exactly does mining work? is it like playing a lottery? where each hash you compute is a "ticket"? or is it like working, where you get money after a certain amount of work is done?

it's like a lottery ticket

I've only been mining for a short while so I may not be able to give you as much information as other users may, but here is what I do know.

Solo mining is essentially like a lottery. With so many people in mining pools, blocks are more easily found by groups than by individual people, but the payout is higher if you find a block solo mining rather than in a pool. However, most of the pools offer two payment types: Proportional or Pay-Per-Share. Proportional is you earning a set amount of the actual reward for finding the block, which is split up among all the users in the pool. Pay-Per-Share is when you get paid a fixed amount per share you give to the pool. Each share is essentially a work unit that is sent to the pool which in turn helps to find more blocks. Depending on how long it takes to find a block, either one can be more profitable than the other. It also is determined by your hardware as well; if you can't mine all the time or you can't mine as fast as other people, Pay-Per-Share is generally better (at least from my understanding - I may be wrong here).

if im currently mining, and another person got a block, does that "reset" my work?

You have to change what you're working on, but this costs you almost nothing to do. The work doesn't accumulate, so there's no work to throw away.

thanks guys, for all the information you've given me.

but i still got a few questions. what do i do when i found a block?

If you're mining solo (not with a pool), nothing. 50BTC will be credited to your wallet shortly, congratulations!

this is weird, i seem to have gotten a block. beginners luck i guess  :-\

i noticed there needs to be more confirmations. Is there any way to speed this up? also, do i have to leave my computer on to get confirmations?

No, and no. A confirmation is a block that was found after the transaction has taken place. I think when you have found a block, you need 120 confirmations to receive the reward. This means that 120 other blocks must be found after yours. You don't have to leave your client or your computer on to receive transactions, your client will "catch up" once you start it again.

i got another question about pooled mining.

Is pooled mining more efficient (blocks solved per hour) than a cluster machines working independently?

Pools solve more blocks per hour because they have more power. If you had a 95 Ghash/s machine, you would solve the same as slush's pool. With that said, they aren't any more efficient, they just have the ability to "buy" lottery tickets faster than solo mining. Doesn't mean they will win the lottery, but their chances are higher.

Pooled mining is slightly less efficient than a local cluster of machines because of the greater chance of network problems(latency, packet loss, etc).