Gone are the days when a solo miner could win the Bitcoin block reward. Back in January 2009 when Satoshi Nakamoto launched Bitcoin, he and the early adopters were mining Bitcoin on their CPUs.
But as Bitcoin’s popularity grew so did the mining difficulty. GPUs ousted CPU, and then ASICs Antminers pretty much ousted GPU for mining Bitcoin. What’s more, big powerful mining farms have ousted the solo miner, even one who has the latest Antminer.
Joining a Mining Pool is a Must
Joining a mining pool allows you to work together with thousands of other miners. Ploughing your hashpower into the pot to give your pool and you a much more realistic chance of winning the Bitcoin block reward.
Although we are seeing a move towards the US, Texas especially, most mining is still done in China. This is due to the cheap electricity costs, and the powerful ASICs mining rigs being manufactured by Beijing based Bitmain.
Most of, but not all, the biggest mining pools are based in China too. But when joining a mining pool you should know exactly how their rewards are paid out and how much cut they take.
These change as they compete for your hashpower, so it’s always important to do some research before you sign up for what’s best for you.
There are several ways mining pools pay out, so it’s critical to your profits to make sure you understand what’s best:
Pay-per-Share (PPS): Each time a share is submitted, a miner is paid a fixed amount. It’s generally regarded as the safest way for payments but the problem with this method is that you’ll usually pay higher pool fees.
Proportional: Miners are paid based on the proportion of shares they found. So, the more shares submitted, the more you will earn. The main catch with this is you either need a powerful mining rig, or you need to find a pool that has a lower hashrate, so you become one of whales of the mining pool.
Pay Per Last N Shares (PPLNS): This is like proportional, but each share can be rewarded on multiple rounds. It can be quite lucrative, but it is also based on luck. This method calculates your payments based on the number of shares you submitted during a shift, and it depends on the amount other miners have submitted too. Your earnings can fluctuate, but usually the main payout difference over a period of time is when a lot of miners leave or join the mining pool.
FPPS: Similar to PPS, but it also divides the mining fee and adds a standard transaction fee to the regular block rewards.
Which Mining Pool Should You Join?
When joining a mining pool there’re always a few things to consider, and there's no one fits all recommendation. It’s important to know as much about the mining pool you decide to join.
Some of them have a tarnished history, but they still have tens of thousands of miners in their pool. With that said, they are mostly trusted, and secure, but beware of hidden fees certain pools charge.
A few recommended Mining Pools:
Poolin is a China-based multi-currency mining pool, which was launched by the same people as BTC.com. Poolin’s payment structure is FPPS, and they offer extra bonuses for mining other cryptocurrencies.
Poolin is currently the biggest mining pool with the highest hashrate, and they currently mine about 20% of all new bitcoins. They claim to be committed to integrating mining resources for miners with the aim of making it much more profitable to mine cryptocurrenciess with the pool.
F2Pool is another mining pool based in China originally, although they do have presence in Europe and the US. Having been around since 2013, F2Pool is one of the oldest mining pools, and while minting about 17% of the new BTC it is one of the biggest mining pools.
F2Pool also offer multiple cryptocurrencies to mine. Their setting up process is as easy as it gets for mining pools and it can be considered ideal for the beginner.
They have a PPS payment method and although the mining fee is quite high, there are no hidden fees. It’s such an established mining pool with thousands of miners on their books, so it has to be worth looking at if you’re wanting to get into mining.
AntPool is a cryptocurrency mining pool based in China and owned by Antminer manufacturer Bitmain. It currently mines just short of 10% of all Bitcoin. They also mine several other cryptocurrencies including Ethereum and Litecoin.
It’s believed that they have more than 2,000 servers in favourable mining conditions worldwide, and can offer uninterrupted pool maintenance year round.
It has an easy to use interface and is recommended for first time miners. They have a PPS and PPLNS payment method so it gives miners an option of what’s best for them
BTC.com is another mining pool based in China and owned by Bitmain. They mine multiple cryptocurrencies, and they use the FPPS payment method.
Be careful though, as they claim to have zero mining fees, and although their FPPS maybe zero there are other charges. That said, they are competitive, if it’s right for you.
Many believe the FPPS method is fairer and more beneficial to the miner than the similar PPS method, but BTC.com does have a tarnished past, but they’re still around and still have thousands of miners in the pool, so they must be doing something right.
P2Pool is one of my favourite mining pools. Unlike the others mentioned above, P2Pool is peer-to-peer, decentralized system, just like Bitcoin, which makes it truly global. This makes it more resistant to hackers than the centralized mining pools mentioned above.
The payment method is PPLNS, but the fee you pay depends on which node you choose to mine with. P2Pool nodes work on a chain of shares similar to how Bitcoin operates. Each node works on a block that includes payouts to the previous shares' owners and the node itself.
Unlike centralized mining pools the payments are done off chain, and P2Pool cannot take your cryptocurrency off you, unlike any centralized entity that controls how things are done.
A setback for the average person is that you can only mine Bitcoin or Litecoin, and P2Pool miners must run a full node. However, if you have the patience and knowledge running a full node is technically the only way you truly own your cryptocurrency.
Mining cryptocurrency is a great way to earn it rather than buy it. It’s a highly competitive industry today, so joining a mining pool is a must for the solo miner.
Most mining pools are legitimate, but I would recommend doing as much research as you can before opting for any mining pool. The biggest are certainly not the best or fairest on all aspects, but they are legitimate.
For me, I prefer decentralized mining pools, but that’s my personal choice. The main thing is that you make a profit, and that really doesn’t depend on the payments from the mining pool. It depends on the price of Bitcoin and other cryptocurrencies, so always do your own due diligence.
Author: Tommy Limpitlaw