What Is a Mining Pool?

An overview of the concept of a mining pool and how to get started with it, different mining pools and their individual approaches to splitting the reward and preventing cheating.

Unless you have invested a fortune in mining, you are probably better off mining in pools. This guide will help you to understand the difference between various models of mining pools. Pick a crypto, set up a wallet and join a mining pool!

Unless you have invested a fortune in mining, you are probably better off mining in pools. A mining pool is a group of miners that combine their processing power to improve their chances of winning block rewards. Rewards are split among pool participants according to the work each of them did.

Mining pools appeared as a solution to a progressively growing mining difficulty. Before mining pools, a miner would get a reward randomly once in several months. Pool-mining ensures a steady income evenly spread across the entire time you are mining.

A mining pool must make sure that you indeed are trying to solve the puzzle. It sets a valid difficulty range. If your solution is within that range, you have contributed a ‘share’ to find the block. You get rewarded based on the number of your shares. However, different mining pools use different approaches as to how they split the reward and prevent cheating.

Pay-per-Share

The most common payout structure. A PPS model keeps count of all your shares and pays a certain fixed amount for each. You can withdraw your money at any time because your payout is taken from the pool’s existing balance. Examples: Nicehash, AntPool, LitecoinPool, SparkPool, and many more.

Full Pay-per-Share

FPPS model is similar to PPS with the exception that it includes a portion of transaction fees into your payout, whereas PPS-based mining pools leave fees to themselves. FPPS was invented by BTC.com, and there are not many pools that use this model.

Proportional

You are rewarded at the end of a mining round (when a block is found) based on how many shares you contributed to finding that individual block. All shares are equal, and it does not matter whether your share was the one that solved the block. Example: NoobPool

Pay-per-Last-N-Shares

PPLNS is similar to Proportional model but your reward is based on the fixed number N of your last shares without any regard for round boundaries. PPLNS is quite common and used in SparkPool, DynastyCoin Mining Pool, ViaBTC, KanoPool.

Score system

Slush Pool keeps score of all shares during a mining round. Early shares are more valuable than those submitted late in the round. This prevents ‘pool hopping’, a cheating strategy where miners switch pools within a round.

To learn more about reward strategies and mining pool, visit Mining Pool Comparison page.

Multipool mining

Multipool is the first service that automatically switches its miners to a more profitable coin at the moment. Multipool uses Proportional reward system. Multi-pool mining leads to spikes in the difficulty of currencies, which is not healthy for the network and discourages loyal miners.

Pool-mining gives small miners an incentive to participate in the mining process, which is obviously good for the network. However, if a mining pool possesses more than half of the network’s total hashrate, it can execute a 51% attack. The pool then can seize control of the network, compromise it, and create an all-around big mess.

Related news

New Obelisk GRN1 Launches as a New Generation Grin ASIC Mining System via Cuckatoo31 Algorithms

Obelisk, a manufacturer of ASIC mining hardware, launched a next-generation mining system called The Obelisk GRN1. The intention is to target the Cickatoo31 Proof-of-Work (PoW) algorithm. The new chip includes new improvements to the hashing boards, control boards, mechanical design and also enhancements to the PSU. The information was released by the company on January 17 in a blog post. The team behind Grin decided to start developing ASICs for the Cuckatoo31+ algorithms on Grin. At the same time, it has provided code that defines a specification for the Cuckatoo31+ algorithms. According to the press release, hardware development faces serious challenges in terms of flexibility. Modifying a product can result in several months of delays. Now, the Grin team has given Obelisk all the required confidence to move forward with development and commit to a final design. The company has decided to create the most competitive miner possible with a large number of very large chips. In this way, they will be packing as much density as possible into the machines. According to the company the GRN1 is expected to have 10,000 mm2 of silicon, and because of this, its price will be higher. Obelisk explains that they will be making a two-phase sale of the new GRN1 miners. The first one will be related to a voucher sale in which the company will be selling $3,000 vouchers that can be convertible into 1 Cuckatoo31 mining unit. The sale starts today January 17th and it will last until February 1st. There are 10,000 vouchers available. There will be a second phase that is a full machine sell that will be going live in March. The price of the units will be $6,000 each. Voucher holders will have the possibility to exchange their vouchers for hardware devices without any additional cost. Obelisk informs that if there are clients that do not feel comfortable purchasing the Cuckatoo31 miner, the firm will be issuing a refund of $2,000. However, there are only two weeks for voucher holders to claim a refund. The firm has also explained what they will be doing with the funds received from selling mining equipment. Obelisk wrote about it: “During the first phase, we will be setting aside $100 per voucher sold to fund Grin development. During the second phase, we will be setting aside $500 per new unit sold for Grin development. The majority of the money collected for Grin development will be used to fund no-strings-attached stipends for independent developers. The remaining money will be set aside to fund high-priority endeavours such as security audits.” Obelisk said that they are not comfortable providing technical specifications. They explained that they have not finalized the chip or completed the final verification and layout stages of design. Nevertheless, they expect that the unit will be performing at least 100 graphs per second and consume no more than 800 watts. This can be compared with the NVIDIA RTX 2080 Ti. It performs less than 2 graphs per second and it also consumes 250 watts. The company is working in order to protect Grin against 51% and censorship attacks. This is very important for the community after all the attacks experienced by other projects in the market.
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