Mining cryptocurrency today is perhaps the most widely discussed way to receive electronic money. Hwever, the algorithms on which cryptocurrency mining is built, increasingly limit the possibilities of mining alone (the so-called “solo mining”), miners form pools. This allows participants to adapt to the complexity of the technical process and jointly receive the cherished coins.
What are mining pools and how do they work?
Mining pools are special cryptocurrency mining servers that distribute the tasks of calculating electronic currency blocks (hash) between the capacities of separately connected network participants. Previously, such a task was handled by a medium-capacity computer, but now, given the great popularity of cryptocurrency mining and the complexity of its algorithms, it is necessary either to have very powerful and expensive equipment or to join pools for mining.
Each member entering the pool sends the power pool of their equipment to decrypt the block – the so-called “share “(from the English word “share”), for which he receives a reward. Even if the power of the device is small, the participant will receive a proportion of total earnings, commensurate with his costs (electricity, work time for calculating the unit).
It is this simple logic of the distribution of profits that pools especially attract miners. All teamwork is conducted absolutely transparently, the participant receives exactly as much as his “iron” earned.
These are the main differences that are now highlighted by experts, although, of course, at the dawn of their existence, the mining pools had a much smaller number of features.
Why do we need pools for mining?
As soon as e-currency mining algorithms began to actively improve, solo mining with the use of relatively weak equipment started to pay for itself less and less.
This trend has been around since mid-2010 in the case of Bitcoin. Then users gradually began to come to the conclusion that it was necessary either to greatly increase the capacity of their equipment, or to create whole groups of miners, combining the capabilities of hardware to increase productivity. From this point on, there was a peculiar split in the mining community. Some miners chose to unite in mining pools, while others decided to improve the equipment for the extraction of cryptocurrency at the expense of ASIC chips (both for themselves and to order).
The first full-fledged pool for mining is Bitcoin.cz, among the miners better known as the “Slush’s pool”. This community of Czech programmer Marek Palatinus was created on September 18, 2010 and developed a cryptocurrency production capacity of up to 10 GH / s. Now this rate seems low, but then it allowed to earn tens of thousands of dollars a day from mining.
The most important rule, which was originally the basis of the work of mining pools, is decentralization. No one inside the pool should have a computing power of more than 50% of the total capacity of the entire pool. The same rule applies at the pool level as such. No single pool can have more than 50% of the total capacity of all existing pools.
This rule was introduced because the miner, who owns more than 50% of the computing power, can actually influence the work of all participants, who contradicts the original idea of how the cryptocurrency mining process should be built.
For example, the recent case of the GHASH.io pool, whose capacity came close to the 50% share of the global hashrate several times, made all representatives of the crypto industry seriously nervous, as the overall situation became too unstable. At the end of 2016, mining in this community was stopped due to the impossibility of reducing the influx of new users to a popular service. Although all the money earned was transferred to the participants, the work in this pool was completely stopped.
For the successful signature of the block of Bitcoin, miners receive a reward of 12.5 BTC, but in order to properly select the hash, the computer will have to work seriously, because today it requires enormous computing power.
For example, ASIC, one of the productive integrated circuits for mining costing several tens of thousands of dollars, can demonstrate performance up to 6 TH / s (6,000,000,000,000 hashes / second). This speed seems huge, but in fact it is only about 0.00005% of the main mining speed for today, which is determined by the maximum number of hashes before determining the correct (10,400,000 TH / s) and is constantly increasing.
Based on simple calculations, the owner of such an ASIC farm will be guaranteed to receive remuneration from the server (12.5 coins) only after 24 days of continuous operation of the equipment. On the one hand, it’s very good, but not everyone is ready to lay out tens of thousands of dollars for the purchase of equipment, to provide the necessary conditions for its work and to invest in electricity. Therefore, participation in e-currency mining pools is one of the most acceptable option.
How to choose a pool for mining?
It is the correct choice of the pool for mining that ultimately determines the amount of possible profit, since different pools determine the mechanism for calculating the income of participants in different ways. There are three main ways of calculating the reward of pool members
As of the end of 2017, the Chinese communities that have established themselves among users have been among the top three mining pools with the greatest capacities.
At the moment, when solo mining using PC power does not always bring the desired profit margins, cryptocurrency mining becomes possible only in the pool or when buying expensive and really powerful ASIC equipment. If you decide to do without huge investments in the purchase of state-of-the-art equipment, participation in the mining pool will be a good option that will allow you to constantly earn electronic coins with your colleagues in the pool.