BetterHash is a mining method developed by Bitcoin Core developer Matt Corallo.
The main idea behind BetterHash is to improve decentralization of Bitcoin mining efforts.
The situation today is such that big mining operations, the large mining pools, control a large percentage of network hashpower.
The way this works is simple in concept, despite the complex cryptography that is involved.
Mining pools distribute little chunks of “work” to thousands of miners worldwide. Miners take these chunks and crunch them until a desired outcome is obtained. This outcome is a block that has a difficulty above a certain number decided by the Bitcoin network.
By working this way, small miners can get a share of the mining rewards even if they don’t solve a Bitcoin block. Solving a block would require hundreds of years for small hobbyist miners. By sharing the pool profits, miners receive a tiny share of the reward even if they’re not remotely close to solving a block.
BetterHash works by allowing the miners to choose the chunks they work on.
In mining pools, the chunks of work are sent out by the pool. So miners don’t have much flexibility in choosing how to process that chunk.
By allowing the miners to choose their own chunk “template”, and therefore to assemble their own blocks, BetterHash is decentralizing a bit more power.
Miners can then get creative in assembling blocks in different ways which, perhaps, could yield better results than the way the pool assembles the blocks in the first place. Results are not assured, but it does give the miners more options.
Why isn’t BetterHash live yet?
BetterHash is a BIP, which is a Bitcoin Improvement Process request.
BIP’s are discussed by the community and their development depends on collective initiative. If the community gets behind a BIP, it’ll get developed, tested and released quickly.
When BIP’s don’t receive much attention, their development is slower.
This working methodology has worked well for Bitcoin throughout the years. The community drives Bitcoin developmeht through BIP’s. Those who attract great interest get released quickly, those who don’t go slower or may not get accepted at all.
You can track the BetterHash BIP progress via the link at the end of this article, under references.
Here is a 1.5 hour technical description of BetterHash: