If you are just going to mine cryptocurrency, and your starting opportunities do not allow you to build a big farm of ASICs with an autonomous power supply, the bitcoin miner pool is the best way to achieve more or less tangible results and recoup the equipment in the nearest future. Frankly speaking it is an only real opportunity to start mining nowadays.
Table of content:
- What is a pool, its functions and benefits
- Some facts from the BTC pools history
- The principle of 50%: balance is above all
- How to choose a pool: criteria for selecting
Definition, functions and benefits
History knows a lot of examples when some difficult task, inaccessible to one person, was quickly and effectively solved together. There are also a lot of proverbs and sayings in this regard, and it is the best evidence that getting any hard work done is easier all together, when an unbearable burden is shared between the participants. What is the most difficult thing in mining? The main problem is that with low-power equipment it is practically impossible to find blocks. Even the index used for calculations in mining is called “difficulty”.
That's why the miners unite into bitcoin pools. A pool is a server or several decentralized nodes, with the help of which it becomes real to share cryptocurrency blocks finding between all the capacities connected to this server or nodes. In the old days, using only a computer with average features it was possible to find the block, but due to the hype around the mining and the corresponding increase in difficulty, requirements for the hardware became much more serious.
In the case of bitcoin, the reward for the found block is 12.5 BTC, but this requires a huge computing power. Take an ASIC with 6 TH / s for example. Such a big number of hashes per second may seem unimaginable, but in reality it is only 0.00005% of the overall mining speed! This device will have to work rather long and continuously, which, taking into account the electricity cost and the product price itself, will result in a tidy sum. That's why it's better to connect the device to the pool.
What does “share” mean? There is nothing complicated here: the power of your device, which you attach to the general process of the block finding, is called “share”. Your reward depends on the share of participation. Let’s highlight the benefits of pools. The fact, that it is possible to find a block by common efforts, is already very important on its own, but there are other features that every bitcoin pool can boast:
- Decentralization excludes the possibility for owners or administration of a pool to steal money from miners or influence on the withdrawal of funds.
- Saving money and resources: a miner will not have to buy expensive equipment in large quantities and pay exorbitant sums for electricity.
- The principle of fair profit is that each participant, depending on the contribution, receives a share of the total volume. The entire process of mining is transparent.
When bitcoins pools appeared
There was an urgent need for pools in 2010. Home computer equipment stopped paying for itself and did not meet the requirements of mining. The miners had two choices: to buy expensive and more productive equipment or to group together, assembling their total hardware productivity. All experienced miners know enough about the Slush Pool. A Czech Marek Palatinus presented the resource for the first time in 2010 and proposed an unprecedented production capacity of up to 10 GH / s. Now this fact leads to a smile, because there are ASICs on sale with the same hashrate per one device, but at that time, the mining provided income measured by tens of thousands dollars a day.
The rule of 50%
When someone owns more than half of something valuable, whether shares of an enterprise or other property, all the advantages are on his or her side and at some point such a person or a company will dictate their terms and subordinate others to their will. With BTC mining pools, this number does not pass. No member of the community has the right to cover up to 50% of the total pool capacity with their equipment. As well as the pool itself, it can not have more than 50% of the global hashrate.
Let's remember the history connected with the GHASH pool. This organization took half of the entire capacity of the network, so the situation was threatening and unstable. In 2016 the company was forced to stop its activities, because they could not accept new participants, nor could they reduce the potential already available at that time. The best bitcoin mining pool transferred the cryptocurrency to the wallets of its participants and ceased to exist.
How to choose a BTC pool
There are a lot of pools. Moreover, everyone who has a wish and the necessary starting capital can create his or her own pool and earn more on this, but in this chapter we will talk about the criteria for choosing a working pool.
Popularity and reliability
A service should be well-known and promoted, and its capacity must be sufficient to receive a stable income. There are special websites that publish independent ratings. Study them and make a decision. Of course, the reviews will help, but read them not on portals of pools, but also on independent sites and forums.
Will my capacity be sufficient?
It's completely useless to connect a home computer or a weak farm on video cards to the bitcoin mining process. Most pools place restrictions on the entry of weak miners and accept only ASICs owners and farms based on them.
Earnings and withdrawal of funds
Mining for the majority is a way to make money, not a hobby, so withdrawing funds is an important criterion. What fee is taken by the pool, what kind of income are you guaranteed for a certain period? It is also important to calculate the cost of electricity, whether cooperation in this regard will be beneficial.
Mechanisms for calculating income
There are several ways of calculating profits, but the most common are the three that are listed below.
- Within the framework of the Proportional (PROP) system, the participant receives rewards depending on the shares that were involved in the block search period.
- Pay Per Last N Shares or abbreviated PPLNS means charging for shares that have been sent in a certain time. This interval is called shift.
- If you registered in PPS (Pay Per Share) pool, the payment will be fixed and paid to you for each share.
So, to become a professional miner, to maximize your equipment and most importantly - in the shortest possible time to recoup it and get a tangible profit, you can only use the bitcoin miner pool. The process of registering on the service, creating a wallet, setting up software and hardware has already been covered many times in our blog articles.