A couple of buddies and I went out and bought Nerd Miners, because, well, we are nerds and we like bitcoin. These are tiny bitcoin “miners”. They’re essentially mini raspberry pis that try to mine bitcoin. They obviously don’t really stand a chance to mine bitcoin, because their chance of mining one is infinitesimally small. But, its non-zero! And, a handful of blocks have been mined by these little “lottery” miners. These things are cheap, no more than a handful of lottery tickets. So, lets compare it to playing the lottery.

The nerd miner I have cost about $40 dollars. It consumes a watt of electricity, which is less than a dollar to run it for a year so lets ignore that. Lets assume the miner only runs for a year to keep the math easy, and lets assume bitcoin is 100K and the block reward is 3.125. Bitcoin blocks are mined every 10 minutes, so there are about 52K blocks per year. The miner has a hash rate of about 80KH/S and lets say the bitcoin hash rate is around 800TH/s. So, we have a 1 in 10M chance of winning. Hey, that’s no so bad and we are playing all the time! The expected value is the probability of winning times the reward times the number of entries → $1.6. Okay, that’s not great I spent 40 dollars to make one back.

What if I entered the powerball instead? Those odds are 1 in 292M. Well, a 100M jackpot would payout 50M, lets ignore the smaller prizes for now. The probability of winning (1 in 292M) times the reward (50M) times number of entries (20) → $3.42. Okay, that’s not great but a little better I spent $40 to make $3.4. Jackpot values get much higher than this, but then you also have to split with others.

Well, there you have it with some napkin math. Although, hold on we have an assumption on that lottery miner that it only lasts for a year. Bitcoin hash rate has roughly doubled every year, so our expected value will decrease by half every year. What if the miner lasts 3 years? Well, the expected value would be $2.8. That’s a little closer!

The point stands, you should play the powerball rather than attempt to lottery mine bitcoin. I assume that if the bitcoin price increases, then the bitcoin hash rate will increase, and your probability will decrease proportionally - so bitcoin price doesn’t really matter. Do I regret my decision? Nope. Would I buy a second one? Also nope.

If you are thinking - you just need a bigger and more efficient miner. Yeah, but no. Then we aren’t playing the lottery, we are mining for bitcoin.