What is bitcoin pooled mining

Mining pool

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Mining pool is the pooling of resources by miners, who share their processing power over a network, to split the reward equally, according to the amount of work they contributed to solving a block. A «share» is awarded to members of the mining pool who present a valid proof-of-work that their miner solved. Mining in pools began when the difficulty for mining increased to the point where it could take years for slower miners to generate a block. The solution to this problem was for miners to pool their resources so they could generate blocks more quickly and therefore receive a portion of the block reward on a consistent basis, rather than randomly once every few years.

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Mining pool review [ edit ]

Mining pools may contain hundreds or thousands of miners using specialized protocols. In all these schemes B stands for a block reward minus pool fee and p is a probability of finding a block in a share attempt ( p = 1/D , where D is current block difficulty). A pool can support «variable share difficulty» feature, which means that a miner can select the share target (the lower bound of share difficulty) on his own and change p accordingly.

The list of pools for mining is extensive – in the world there are more than a thousand. The vast majority of users work through bitcoin pools. The level of complexity of the production of this currency is so high that alone, even with a supercomputer profit is not obtained. Therefore, all new pools are formed. There are other cryptocurrencies, younger than bitcoin, which are faster and easier to mine. But they do not have real value in the network, and they can only earn with the hope that in the future their rate will grow, and this is more like speculative mining.

Pay-per-Share [ edit ]

The Pay-per-Share (PPS) approach offers an instant, guaranteed payout for each share that is solved by a miner. Miners are paid out from the pool’s existing balance and can withdraw their payout immediately. This model allows for the least possible variance in payment for miners while also transferring much of the risk to the pool’s operator.

Each share costs exactly the expected value of each hash attempt R = B * p .

Proportional [ edit ]

Miners earn shares until the pool finds a block (the end of the mining round). After that each user gets reward R = B * n/N , where n is amount of his own shares, and N is amount of all shares in this round. In other words, all shares are equal, but its cost is calculated only in the end of a round.

Bitcoin mining pool [ edit ]

Bitcoin Pooled mining (BPM), also known as «slush’s system», due to its first use on a pool called «slush’s pool’, uses a system where older shares from the beginning of a block round are given less weight than more recent shares. This reduces the ability to cheat the mining pool system by switching pools during a round, to maximise profit.

Pay-per-last-N-shares [ edit ]

PPLNS method is similar to Proportional, but the miner’s reward is calculated on a basis of N last shares, instead of all shares for the last round. Therefore, if the round was short enough all miners get more profit, and vice versa.

Geometric method [ edit ]

GM was invented by Meni Rosenfeld. It is based on the same «score» idea, as Slush’s method: the score granted for every new share, relatively to already existing score and the score of future shares, is always the same, thus there is no advantage to mining early or late in the round.

The method goes as follows:

• Choose parameters f and c (fixed and variable fee).
• At the start of every round, set s = 1 . For every worker k , let S_k be the worker’s score for this round, and set S_k = 0 .
• Set r=1-p+ p/c , where p = 1/D . If the difficulty changes during the round, r needs to be updated.
• When worker k submits a share, set S_k = S_k + spB , and then s = sr .
• If the share is a valid block, end the round. For every worker k pay (1-f)(r-1)S_k/sp

Double Geometric method [ edit ]

Generalized version of Geometric and PPLNS methods. Using this method, because the «most profitable» coins are being mined and then sold for the intended coin, you generally receive more coins in the intended currency than you would by mining that currency alone. This method also increases demand on the intended coin, which has the side effect of increasing or stabilizing the value of the intended coin.

The best Bitcoin mining pool [ edit ]

It is difficult to say which pool is the best for mining, as everybody needs different options. Take a look in the list of mining pools and decide, which one you need there: Mining Pools List.

Which mining pool to choose? [ edit ]

Before you make your choice, compare your favorite pools in some ways:

• power pool — new pools, still do not get the necessary power will not be able to offer you decent profits, define for yourself the best options, review ratings analysts find the statistics of figures pools, such as here BTC.com or here Blockchain.info.
• evaluate your own equipment — you may need to raise the performance of the graphics card, and then mining will not be so profitable. If you mine with the old equipment, the profit will not be worth even the cost of electricity,
• the method of profit sharing — most often the income from solving blocks is divided in proportion to the contribution of the participants, if you can not make a significant contribution, then the distribution will be equally profitable,
• payments — find out if there’s a way to bring nomineee on the card or e-wallet, as well as interest service fee.

Earning through mining can not be called a reliable income, but for many it has become a convenient way of passive cash inflow. Mining pool overview is of course incomplete and it is not possible to cover all services. The best of them the user will determine himself, based on their capabilities and objectives.

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What Is A Bitcoin Mining Pool?

Bitcoin mining can be expensive, and in many cases not even profitable due to the energy costs. Fortunately, enthusiastic Bitcoin miners have come up with a solution to the problem. Bitcoin mining pools are the simple practice of pooling the processing power of several computers to solve Bitcoin transaction blocks. Let’s have a look at some of the pros and cons of mining pools.

Advantages of Bitcoin mining pools

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The benefit of joining a mining pool is obvious: many hands make light work. Your mining pool will have a much higher likelihood of winning Bitcoins with more processing power. You can earn a decent steady income from joining a pool.

Disadvantages of Bitcoin mining pools

There is also a downside of joining a pool: all rewards will have to be shared between the members. That means the yields are far lower than if you were mining solo. Whether or not it’s a feasible solution for you depends on what your aims are.

Mining difficulty

It’s worth bearing in mind that cryptocurrency mining comes at different levels of difficulty . The number of Bitcoins is capped at 21 million, of which 80% has already been mined. It becomes increasingly more challenging to mine Bitcoin the closer we get to reaching the cap. That means it’s nigh but impossible for a solo Bitcoin miner to compete with the big mining companies. That makes mining pools such an attractive option for Bitcoin miners in particular. That said, there are many other tokens you can mine apart from Bitcoin.

What cryptocurrency token should you mine?

It’s worth looking at cryptocurrencies other than Bitcoin if you’re a beginner. After all, you can trade the altcoins you mine on the exchanges to get Bitcoin.

Merged mining

Bitcoin is not the only cryptocurrency that uses the proof-of-work algorithm to award tokens. NameCoin and DevCoin are two examples of tokens that use the same verification system. Merged mining is the practice of solving transaction blocks that can be used for several cryptocurrencies.

SHA256 vs. Scrypt

The proof-of-work algorithm Bitcoin uses called SHA256. While there is nothing wrong with SHA256, it does make it impossible to mine Bitcoin without several dedicated ASIC mining rigs. Scrypt is an algorithm used by other cryptocurrencies like Litecoin and requires less processing power to mine tokens.

Multipool mining

Smart miners have figured out a system that allows you always to mine the most profitable cryptocurrency. Multipool mining is the practice of switching between mining different tokens according to their price fluctuations.

Rewards and fees

You should keep an eye out for the different rewards on offer when shopping around for a mining pool. The majority of pools award tokens according to how much processing power you contribute. It’s also worth paying attention to any fees the mining pools might deduct from your reward. Fees can typically range from 1-10% if your share. It is, however, possible to find pools that don’t subtract anything.

How to get started

There are many websites with lists of different mining pools you can join. Check some of them out here.

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What is bitcoin pooled mining

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