Mining Science | What is "luck value"? What impact does it bring?

Answer from @JackyLHH, editor of Zhikuang University:

When we look at the mining pool computing power rankings, we will find that many websites also give "luck value" data. What is the luck value? What impact does it bring? Today, let's learn about it.

01

What is Luck Value?

Bitcoin mining is the process of mining machines constantly searching for random numbers to perform hash operations. If the result of the hash operation meets the system requirements of Bitcoin, then the mining machine wins the right to record the data and the corresponding block reward. Therefore, whoever has more computing power and faster computing speed has a higher probability of getting the block reward.

In the long run, the probability of mining a block is proportional to the proportion of computing power owned by the network, but it will fluctuate in the short term. This is like tossing a coin. The probability of heads facing up each time is 50%, but you may toss it 10 times in a row and each time it faces heads up, and the frequency of heads facing up becomes 100%. This is because 10 times is still too small as a sample. The more times you toss it, the closer the frequency of heads facing up is to its probability, which is 50%.

The same is true for Bitcoin mining. If the computing power of mining pool A is 10E and the computing power of the entire network is 100E, then theoretically the probability of mining pool A mining to mine a block is 10%, which means that out of 100 blocks, 10 blocks are mined by mining pool A. But in practice, mining pool A may be extremely lucky and mine 20 blocks, or it may be unlucky and only mine 1 block. The ratio of the actual number of blocks mined to the theoretical number of blocks mined is called the "luck value".

In the above example, if mining pool A mines 20 blocks, the luck value is 200%; if it mines only 1 block, the luck value is 10%. Under normal circumstances, the luck value of the mining pool is 100%.

02

The influence of luck

“ To build a Bitcoin mining pool, you need 1,000 Bitcoins first. ”

This is not sensational. Just as large Bitcoin transfers require six block confirmations to be safe, building a mining pool also requires 1,000 Bitcoins to resist the risk of luck value fluctuations, because many mining pools now settle accounts with miners based on theoretical returns (PPS revenue model).

If there is no 1,000 bitcoins as insurance, and the mining pool encounters a few days of low luck, it will be at risk of bankruptcy. There was once a mining pool that lost more than 400 bitcoins due to low luck. Fortunately, this mining pool had a strong financial foundation and survived that unlucky period.

Therefore, the fluctuation of luck value has the greatest impact on mining pools. The technical threshold for building mining pools is gradually decreasing, but the capital threshold is increasing (because Bitcoin has been rising for a long time).

In addition, the luck value will also affect the miners who choose the PPLNS profit model. Unlike the PPS model, which settles according to theoretical profits, PPLNS settles according to the actual block earnings. If the luck value is low, there will be no blocks for a long time or the number of blocks is very small, then the miners connected to this mining pool will suffer losses. Of course, if the luck value is high, the income of PPLNS will also be higher than that of PPS.

03

summary

Luck value refers to the ratio of the actual number of blocks to the theoretical number of blocks. The mining pool is most affected by the luck value, followed by miners who choose the PPLNS profit model. Before building a mining pool, you need to have 1,000 bitcoins to resist the risks brought by the fluctuation of luck value.

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Link to this article: https://www.8btc.com/media/597765
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