One of the very first questions that anyone interested ter mining cryptocurrencies faces is whether to mine solo or join a ‘pool’. There are a multitude of reasons both for and against mining pools. However, if the hash rate distribution across the bitcoin network is anything to go by (and it is) then most miners are opting to join a pool. Here’s what you need to know.
Pros and cons
If you’re determining whether to join a mining pool or not, it can be helpful to think of it like a lottery syndicate – the pros and cons are exactly the same. Going solo means you won’t have to share the prize, but your odds of getting a prize are significantly decreased. Albeit a pool has a much larger chance of solving a block and winning the prize, that prize will be split inbetween all the pool members.
Therefore, joining a pool creates a constant stream of income, even if each payment is modest compared to the total block prize (which presently stands at 25 XBTC).
It is significant to note that it is significant for a mining pool to not exceed overheen 51% of the hashing power of the network. If a single entity finishes up controlling more than 50% of a cryptocurrency network’s computing power, it could – theoretically – wreak havoc on the entire network. Te early 2014, many voiced concerns that the GHash.io bitcoin mining pool wasgoed approaching this threshold, and miners were urged to leave the pool.
Ter bitcoin’s case, the current difficulty level is so high that it’s practically unlikely for soloists to make a profit mining. Unless, of course, you toebijten to have a garage utter of ASICs sitting ter Arctic conditions. If you’re a beginner, joining a mining pool is a fine way to reap a petite prize overheen a brief period of time. Indeed, pools are a way to encourage small-scale miners to stay involved.
What to mine?
Of course, bitcoin is not the only currency out there – it’s effortless to find lists of mining pools for your chosen cryptocurrency.
One method of mining that bitcoin facilitates is “merged mining”. This is where blocks solved for bitcoin can be used for other currencies that use the same proof of work algorithm (for example, namecoin and devcoin). A useful analogy for merged mining is to think of it like injecting the same set of numbers into several lotteries.
First-time miners who lack particularly powerful hardware should look at altcoins overheen bitcoin – especially currencies based on the scrypt algorithm rather than SHA256. This is because the difficulty of bitcoin calculations is far too high for the processors found ter regular PCs.
If you’re not sure which currency to mine, there is a pool called ‘Multipool’ which will automatically switch your mining hardware inbetween the most profitable altcoin. Multipool updates every 30 minutes, and overheen time you’ll see balance grow te numerous altcurrencies. If required, the pool does permit you to fix your hardware on just one altcurrency too.
However, Mark from nut2pools.com said of this type of switching pool: “Loyal coin followers hate them because spil soon spil the difficulty of a coin drops, the profitability of it rises. Then all the multipools sway round, thrust the difficulty through the roof ter a few hours, then leave again. It leaves the loyal coin followers having to mine the difficulty back down again at very low profitability.”
When determining which mining pool to join, you need to weigh up how each pool shares out its payments and what fees (if any) it deducts.
There are many schemes by which pools can divide payments. Most of which concentrate of the amount of ‘shares’ which a miner has submitted to the pool spil ‘proof of work’.
Shares are a tricky concept to grip. Keep two things ter mind: firstly, mining is a process of solving cryptographic puzzles, secondly, mining has a difficulty level. When a miner ‘solves a block’ there is a corresponding difficulty level for the solution. Think of it spil a measure of quality. If the difficulty rating of the miner’s solution is above the difficulty level of the entire currency, it is added to that currency’s block chain and coins are rewarded.
Additionally, a mining pool sets a difficulty level inbetween 1 and the currency’s difficulty. If a miner comebacks a block which scores a difficulty level inbetween the pool’s difficulty level and the currency’s difficulty level, the block is recorded spil a ‘share’. There is no use whatsoever for thesis share blocks, but they are recorded spil proof of work to demonstrate that miners are attempting to solve blocks. They also indicate how much processing power they are contributing to the pool – the better the hardware, the more shares are generated.
The most basic version of dividing payments this way is the ‘pay vanaf share’ (PPS) proefje. Variations on this puts thresholds on the rate paid vanaf share, for example, equalised collective maximum pay vanaf share (ESMPPS), or collective maximum pay vanaf share (SMPPS). Pools may or may not prioritise payments for how recently miners have submitted shares: for example, latest collective maximum pay vanaf share (RSMPPS). More examples can be found on the bitcoin wiki.
The other factor to consider is how much the pool will deduct from your mining payments. Typical values range from 1% to 10%. However, some pools do not deduct anything.
Embarking to mine with a pool
Having determined which currency to mine and which pool you’ll work for, it’s time to get began. You need to create an account on the pool’s webstek, which is just like signing up for any other web service. Once you have an account, you’ll need to create a ‘worker’. You can create numerous workers for each lump of mining hardware you’ll use. The default settings on most pools are for workers to be assigned a number spil their name, and ‘x’ spil their password, but you can switch thesis to whatever you like.