Lottery Miner vs. Lottery Ticket

Okay, I know you’re already asking yourself, “What does the lottery have to do with Bitcoin?” And you are right; the answer is really - nothing. Or maybe something - we will get there, I promise.

You see, with Bitcoin, from an adoption perspective, still largely focused on the acquisition phase, one naturally begins to examine the different ways to go about getting bitcoin, and mining always jumps out as a very “easy” method.

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Tales of people getting 50 bitcoins a day still persist at the top of this rabbit hole, striking a deep chord with people who are mostly motivated by the idea of getting into Bitcoin to get RICH. I am not judging this, to be clear, as this is such a common reason to come into Bitcoin it has become a meme amongst Bitcoiners:

I came for the money. I stayed for the revolution.

Unfortunately, this rabbit hole is not nearly as deep as it appears from the surface. One quickly discovers that a combination of special hardware, significant power requirements and highly funded competition (nation state level - welcome Oman!) quickly dashes this dream on the rocks of reality. The truth is that it is very unpractical for an individual to mine successfully now and with the halving only months away, it will be exponentially more difficult.

Enter the lottery miner! Just like in the real world where you can spend a $1 and potentially win a multi-billion-dollar jackpot, with Bitcoin you can build or buy an open-source NerdMiner which will play the Bitcoin hash lottery every 10 minutes and could, against incredible odds, solve a block, winning the lottery and rewarding you with a sweet 625,000,000 satoshis or 6.25 BTC!

But wait there’s more.

Unlike a real-world lottery where every purchase is supposed to go to schools, or public infrastructure, or whatever, bitcoin mining is actual PROOF OF WORK and every miner, even your little underpowered solo miner, by competing for the reward contributes to the security model of Bitcoin.

How you say? Ok let’s not get ahead of ourselves, we will come back to that. Firstly, we need to explain the odds for a nerd miner to win that lottery which requires a high-level understanding of how mining works. Let’s start with the definition from bitcoin.org

Mining is a distributed consensus system that is used to confirm pending transactions by including them in the block chain. It enforces a chronological order in the block chain, protects the neutrality of the network, and allows different computers to agree on the state of the system. To be confirmed, transactions must be packed in a block that fits very strict cryptographic rules that will be verified by the network. These rules prevent previous blocks from being modified because doing so would invalidate all the subsequent blocks. Mining also creates the equivalent of a competitive lottery that prevents any individual from easily adding new blocks consecutively to the block chain. In this way, no group or individuals can control what is included in the block chain or replace parts of the block chain to roll back their own spends.

The chances of winning the reward are directly proportional to the miner’s hash rate. The higher the hash rate, the more likely a miner is to find a block and win the reward. In the case of a NerdMiner the hash rate is ~45 k/hs and the current difficulty rate is 55.6214 TH/s.

Let’s calculate the odds using this formula:

Which in our case would be:

Finally solved as: 1 in 1,236,842,105 chances or 1 in 1.236 billion!

Now let’s compare this to the odds of winning the Powerball Jackpot with a single ticket purchase:

Comparing these odds, it’s clear that the odds of winning a Powerball jackpot with a single ticket are significantly better (lower) than the odds of a miner with a hash rate of 0.000045 TH/s winning a Bitcoin block in the current mining environment.

However, it’s important to understand that these are two very different types of “lotteries.” bitcoin mining involves ongoing, continuous attempts every 10 minutes (on average) against a variable difficulty, while the Powerball lottery is a standalone event with periodic drawings. Additionally, the reward for winning a Powerball jackpot is typically much higher than the reward for mining a single Bitcoin block. (for now)

This brings us back to the “But wait, there’s more” fact that while mining bitcoin isn’t necessarily an altruistic pursuit, it does benefit the Bitcoin network significantly. You see, every mining node participating in the network is contributing to the decentralized transaction recordation and validation of Bitcoin transactions. The high-level result of this work is ensuring there is no double spend, which secures the Bitcoin blockchain.

One additional benefit of running a solo mining node like a NerdMiner relates to the decentralization of the mining power vs. the 51% control security risk. If one group, like a big mining pool or a powerful solo miner, gets more than 51% of the puzzle-solving power, they could potentially control the Bitcoin network. It’s like if one person or group had more than half of the puzzle pieces, they could decide what the picture on the puzzle looks like.

This is a risk because if one group controls more than 51%, they could do some bad things like changing transactions or trying to cheat the system. We want the Bitcoin network to be fair and secure, so we don’t want one group to have too much power.

Solo miners help make the Bitcoin network safer because they’re like individuals who play a fair game. Even though they may not have as much power as big groups, their participation makes it harder for any one group to control everything. It’s like having more people watching to make sure everyone plays by the rules.

So, solo miners, even though they might not win as often as big groups, are important because they help keep the Bitcoin network secure and fair for everyone. It’s like having many good guys in the game to make sure no one can cheat.

While I won’t play the Powerball lottery or buy a scratch off ticket, I will be building my very own NerdMiner to run alongside my ”The Bitcoin Machine” which runs a full Bitcoin node on Umbrel. The odds are not in my favor but there are other benefits and well you never know….

Why are these solo miners winning a block?

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