What are the pros and cons of joining one of the bitcoin mining pools? Keep reading if you are unsure of what this means but are interested in mining.
Essentially, pools are a selection of miners who agree to terms of sharing block rewards. This is done in proportion to their contribution to the mining hash power.
The pools accept connections from miners based across the globe and combine these miners’ hash rates. This combination of hash rates allows for a much higher hash rate total, increasing the probability of finding a block and solving the puzzle.
Different miners have different hash rates, which must be considered when approaching bitcoin mining pools.
Background On Mining
Bitcoin mining serves three main purposes: issuing new bitcoins, confirming bitcoin transactions, and securing the bitcoin network.
Mining is highly competitive, and the objective is for a miner to find or solve a block before any other miner does. The miners’ role is to secure the network and to help process all BTC transactions. Without miners on the network, it would be vulnerable and easily susceptible to attack.
Miners are responsible for creating the new BTC, which is vital to the bitcoin ecosystem.
Miners are competing in an attempt to solve a mathematics puzzle with a newly created bitcoin prize as their reward. Extra currency allows the person to invest, play bitcoin gambling games, pay for services, or start trading.
To win, each miner attempts thousands of calculations each second to find the correct one. The number of calculations made every second by each miner is referred to as a hash rate. When the hash rates are higher, it has more opportunities to solve a block, resulting in more bitcoins being earned.
Dynamics Of Bitcoin Mining
When it comes to mining, the network is designed to create new bitcoins in intervals of ten minutes. Essentially, it only wants one miner to solve a block every ten minutes. Increasing the number of miners who attempt to solve the block means increasing opportunities for miners to solve the block quickly.
To circumvent this, the bitcoin network adapts by making it harder to solve the block by adjusting a numerical value that is part of the block, referred to as the difficulty.
The difficulty increases when more people begin mining, making it harder to solve the block. With this increase in difficulty, there is a great reduction in opportunities to solve the block quickly, especially for those who use slow mining equipment.
This is why some people join or consider joining bitcoin mining pools.
Choosing A Crypto Pool
Some important factors for bitcoin miners to consider when selecting a mining pool are the following:
Miners who prefer more regular payments should consider bigger mining pools. Although the payments are regular, they will be smaller as it is shared amongst more miners.
With small mining pools, the payments are less frequent but are remarkably larger. Irrespective of your choice, your returns should balance out in the long term.
Some bitcoin mining pools charge fees, while others do not. The fees incurred may range from 0% and can rise as high as 4% off the total reward.
Reliability and Security
When looking for a bitcoin mining pool, selecting one that will not steal your funds or is vulnerable to being hacked, causing you to lose your earnings, is very important.
Opting for established bitcoin mining pools with a solid track record is highly recommended. A good idea would be to read user reviews to understand what others say about any particular one.
When miners want to join a pool, they have the option of regular daily payments or getting paid once that pool has solved a block. You must decide how you would like to get paid before signing.
Rewards On Offer
We must know how shares work to understand how the rewards from bitcoin mining pools operate.
In a nutshell, shares refer to units that enable pool owners to accurately calculate each miner’s contribution to the total hashing effort.
When miners operate through a mining pool, they will receive shares in proportion to their contribution towards solving a block. They get paid by the mining pool following the number of shares they have received for their efforts.
With the PPS payment option, miners who earn shares can receive a payout at any stage of the hashing process.
This enables them to receive payment for the shares they receive, irrespective of whether the block has been solved. The share rate is usually fixed and is known well in advance.
A variation of the PPS payment option is the PPS+ rewards option, where the fees are included in the block. This option guarantees that payments and miners have a low risk of not getting paid for their efforts.
Miners do, however, have to incur high fees charged by mining pool owners to compensate for paying out regularly.
This payment option is similar to the PPS option, where miners can submit shares during block finding. Miners with greater hashing power and more experience can submit more shares.
Once a block has been found, the pool pays each miner according to the shares they have received.
As opposed to a fixed rate, the share value received by each miner is equivalent to the block rewards divided by the total share number submitted by all miners solving that block. In essence, more miners solving that block leads to lower share values for each miner.
With the score-based payment option, miners are discouraged from pool-hopping. Each miner’s contribution is calculated with their mining time and hashing power, resulting in a “scoring hash rate” score.
When miners remain in the pool for longer, they achieve greater scores and the value of their shares increases.
Once miners stop mining, they get smaller scores, with the value of their shares diminishing accordingly.
Miners are typically rewarded once a block is solved.
Per Per Last N Shares (PPLNS)
With the PPLNS payment option, miners receive payment for their shares within a predefined window that culminates with a block being solved.
In stark contrast to the other payment systems, the PPLNS will not reward shares received outside that predefined window period. This window period can be defined either by a time frame or a specific number (N) representing the last shares received up to the solving of the block.
Seasoned miners refer to this payment option as Pay Per Luck shares, as they cannot accurately predict the most appropriate time to join. With this system, miners may receive higher rewards if they receive more shares than the last N shares. There is, however, a risk of getting no rewards if they haven’t received shares.
Best Bitcoin Mining Pools
In terms of hash power, AntPool is the biggest bitcoin mining pool. It is based in China and operated by Bitmain Technologies, the world’s largest bitcoin hardware manufacturer.
Miners can create an account without paying any fees. They will, however, require mining hardware and software.
It has a relatively easy interface, and earnings can be viewed on a dashboard. Miners can also monitor their hash rate on a minute, hour, or daily basis.
While creating the account is free, miners will incur some fees. If you choose peer-to-peer solo mining with your hardware, there is a 1% fee.
The PPS fee is 2.5%, while the PPLNS plan has a 0% fee.
AntPool does not disclose transaction fees, which have recently increased. AntPoll keeps 1-2 bitcoins collected from each block, which are not shared with miners on high hash rates.
With AntPool, there is no payment threshold, and payments are made daily for any balance above BTC 0,001. For each bitcoin block, AntPool rewards BTC 12,5.
AntPool is highly secure and implements two-factor authentication, wallet locks, and email notifications as a means of security. The biggest and most popular bitcoin mining pool offers both PPLNS and PPS as payment options.
Payouts may not be as big with AntPool as with the large mining pool. Moreover, transaction fees are not disclosed.
A Czech-based tech company, Satoshi Labs, famous for the first offline bitcoin wallet and the first bitcoin-centric world map, operate Slush Pool.
The platform is unique in that it employs the score-based payment method, where the new shares are given prominence over older shares at the start of the round. This method ensures miners are not at risk of getting cheated by other miners if the pools are shifted within a round.
Slush Pool offers potential miners a demo account before signing up. Users can access graphs, information, and news available through release notes or on their social media platforms.
With the score-based system, there is a fair distribution of rewards amongst the miners. Transaction fees are fixed at 2% for standard transactions, which is applicable across the board. A payment threshold of BTC 0,0002 is implemented, and payments are regularly made once the miner reaches the threshold.
Slush Pool employs two-factor authentication and wallet address locking with read-only login tokens. It is operated on highly secure servers that protect the miners’ bitcoin wallets.
It is a well-established bitcoin mining pool and has an intuitive interface. When compared to other mining pools, the transaction fee is slightly higher.
Although the score-based method avoids the risk of cheating, miners’ scores can quickly diminish when mining has ceased.
F2Pool is one of the largest bitcoin mining pools and is operated in China. It is commonly known as the Discus Fish mining pool and mines Litecoin, Ethereum, and Zcash, in addition to all Bitcoin mining activities.
Miners will encounter difficulty levels based on the hash power as the site employs stratum mining protocol and vardiff. The site has an easy-to-use interface and is relatively simple to use.
Regarding fees, it operates on the PPS payment system and charges an above-average 4%. Payouts are made daily by setting a limit on withdrawals.
F2Pool is very secure and operates on HTTPS protocols. Additionally, it has a wallet lock feature and does not allow miners to change their email addresses after registration. The site does not have any two-factor authentication.
The platform offers miners regular payouts, and the payout threshold is extremely low.
BTCC Pool is also based in China, operates bitcoin exchanges and wallets, and can print physical bitcoins.
The BTCC Pool site has an official account named WeChat that miners can refer to track their hash power, pool their hash power, and get daily statistics.
Miners can be assured of regular payouts based on the PPS payment model with a 2% fee. It employs a stratum mining protocol, and payments are instant to BTCC wallets with a 30-minute waiting period for other wallets.
BTCC Pool is one of the largest bitcoin mining pools with exchange and wallet services. It offers miners a transparent fee structure and has recently introduced an FPPS option.
Anyone with inactive accounts will have it suspended after 90 days, and BTCC Pool will acquire the remaining balance.
Other notable bitcoin mining pools include Eligius, BTC.com, BW Pool, and Bixin.
The Bottom Line
It is evident that many bitcoin mining pools exist, and they each offer different services and rewards that appeal to all types of bitcoin miners.
For those of you who are new to mining, it is highly recommended to join a bitcoin mining pool as opposed to going solo. There are many incredible advantages to joining a pool, as mentioned above.
Once you have the requisite hardware and software, create your account with the pool of your choice, and you are good to go.