What are Bitcoin Mining Pool & 5 Best Bitcoin Mining Pools

The most important question when mining cryptocurrencies is whether to mine solo or join a “pool.” However, as the trends indicate, most miners are opting to join a Bitcoin mining pool.

So, if you’re deciding to join a mining pool, here’s what you need to know. We have come up with a post on Bitcoin Mining Pool. Let’s get going.

Bitcoin Mining Pool

In simple terms, a Bitcoin mining pool is when a group of miners works together to reduce the volatility of their returns. It is very similar to the concept of diversification in portfolio management, in which holding ten diverse stocks is considered better than holding one.

So, a mining pool is the pooling of resources by miners, who go on to share their processing power over a network for splitting the reward equally per the amount of work they contributed to the probability of getting a block.

Bitcoin Mining Pool came into being when the difficulty of mining increased so much that it could take centuries for slower miners in generating a block. So, miners began to pool their resources to generate blocks quickly and for receiving a part of the block as a reward on a consistent basis instead once every few years.

Mining pools contain hundreds or even thousands of miners that use specialized protocols. In all such schemes, B means a block reward minus pool fee, whereas p stands for the probability of finding a block in a shared attempt (where p=1/D, and D is the current block difficulty).

Here, we list out the major mining pool methods:

  • Pay per Share

In the Pay-per-Share approach, miners get an instant, guaranteed payout for their contribution to the probability of finding a block. Miners get paid from the pool’s existing balance, and they can withdraw their payout immediately. In this model, much of the risk is transferred to the pool’s operator. Plus, it allows the least possible variance in payment for miners.

The cost of each share is exactly the expected value of each hash attempt that is calculated as R = B.p

  • Proportional

In this approach, the miners earn shares until the pool finds a block. Each user gets a reward of the value of R = B.n/N, Where n is the number of his shares, and N is the number of shares in this round. In fact, all shares are equal. However, the cost is calculated only at the end of the round.

  • Bitcoin Pooled Mining

It is also known as “slush’s system.” It uses a system wherein older shares from the beginning of a block round are allotted less weight than more recent shares. Here, the miners are rewarded “Proportional” to the shares submitted. So, it reduces the chances of cheating the mining pool system by switching pools during a round to maximize profit.

  • Pay-per-last-N-shares

This approach is similar to Proportional. However, the miner’s reward is calculated based on the last N shares. Here, all shares for the last round are not considered. So, if the round was short enough, then all miners get more profit, and vice-versa.

  • Peer-to-Peer Mining Pool

It decentralizes the responsibilities of a pool server. Here, the miners use a side blockchain known as share chain and mine at a lower difficulty of the effect of one share block per 30 seconds. When the share block reaches the bitcoin network target, it is merged with the Bitcoin blockchain.

Miners get rewarded when this occurs in proportion to the shares submitted before the target block. Here, the miners have to run a full Bitcoin node and have to bear the weight of hardware expenses as well as network bandwidth.

  • Geometric Method

It was invented by Meni Rosenfeld. This method has been based on the same “score” idea as the Slush method. The method works as follows:

  • You need to choose parameters f and c (fixed and variable fee)
  • At the start of each round, set s = 1. For every worker k, let S(k) be the score of the worker for this round. Now, set S(k) = 0.
  • Set r = 1 – p + p/c, where p = 1/D.
  • When a worker k goes on to submit a share, set S(k) = S(k) + spB, and s = sr
  • When the share is a valid block, you need to end the round. Now, for every worker k, pay {(1-f) (r-1) S(k)}/sp

The Pros and Cons of Bitcoin mining pools

The Bitcoin mining pools can be thought of like a lottery syndicate. Its pros and cons are exactly the same. In the “solo” approach, you don’t need to share the reward. However, the odds of getting a reward are significantly decreased. In the “pool,” there is a greater chance of solving a block and winning the reward. However, this reward is split between all the pool members.

So, the benefit of joining a “pool” is that you get a steady stream of income, even in the case when each payment is modest compared to the full block reward (it currently stands at 25 XBTC).

Moreover, a mining pool should not exceed over 51% of the hashing power of the network. In case a single entity ends up controlling more than 50% of a cryptocurrency network’s computing power, then it could create havoc on the whole network.

What is Pool Rewards?

In case of deciding which mining pool to join, you need to consider how each pool goes on to share its payments as well as what’s the fee it deducts (if any).

Pools can divide payments using many schemes. Most of them concentrate on the amount of ‘shares’ which a miner goes on to submit to the pool as a ‘proof of work.’

There are two important things that you need to keep in mind concerning shares. Firstly, mining comes out as a process of solving cryptographic puzzles. Secondly, mining offers a difficulty level.

When a miner goes on to ‘solve a block’ it gets a corresponding difficulty level for the solution.

This turns out to be a measure of quality. In case the difficulty rating of the miner’s solution goes above the difficulty level of the entire currency, then it is added to that currency’s blockchain, and then the coins are rewarded.

Moreover, a mining pool sets up a difficulty level that is between 1 and the currency’s difficulty. When a miner returns a block that gets a difficulty level between the pool’s “difficulty” level and the currency’s “difficulty” level, then the block is recorded as a “share.” These are recorded as proof of work and show that miners are trying to solve blocks.

In the most basic version, payments are divided into PPS (pay per share) model. Then it is also necessary to consider how much the pool will deduct from your mining payments. Typical values start from 1% and go up to 10%. However, some pools don’t deduct anything.

How to start mining with a pool?

You have to figure out which currency to mine and with which pool you’ll work. Now, you can get started. You have to create an account on the pool’s website. It is simply like signing up for any other web service. Once that you have created an account, you’ll also need to create a “worker.”

Well, you can create multiple workers for each piece of mining hardware that you get to use. On most pools, workers are assigned a number as their name, and ‘x’ as their password. However, you can change these to whatever you like.

5 Best Bitcoin Mining Pools

1 – Antpool

Antpool is a Chinese based mining pool that is owned by BitMain. Antpool mines as much as 11% of all blocks.

Some Important Facts

  • Location: China
  • Size: Large
  • Reward Type: PPS & PPLNS
  • PPS Fee: 2.5%
  • Other Fee: 0%
  • Merged Mining: No
  • Transaction Fee: Kept by the pool
  • Stratum: Yes
  • GBT: No

2 – BTC.com

BTC.com comes as a public mining pool and mines 15% of all block.

Some Important Facts

  • Location: China, Europe, and the United States
  • Size: Medium
  • Merged Mining: NMC
  • Reward Type: FPPS
  • Transaction Fee: Shared
  • PPS Fee: 0%
  • Other Fee: 4%
  • Stratum: Yes
  • GBT: No

3 – F2pool

It is based in China. It has mined almost 10% of all blocks in the past six months.

Some Important Facts

  • Location: China, Europe, USA
  • Size: Large
  • Merged Mining: LTC, NMC, SYS, EMC
  • Reward Type: PPS+
  • Transaction Fee: Shared
  • PPS Fee: 2.5%
  • Other Fee: 0%
  • Stratum: Yes
  • GBT: No

4 – Slush

Slush was the first mining pool that currently mines close to 11% of all blocks. It is one of the most popular mining pools out there. However, it is not one of the largest.

Some Important Facts

  • Location: Global
  • Size: Medium
  • Merged Mining: NMC
  • Reward Type: Score
  • Transaction Fee: Shared
  • PPS Fee: 1%
  • Other Fee: 2%
  • Stratum: Yes
  • GBT: No

5 – BW.com

It is another very popular Chinese based mining pool.

Some Important Facts

  • Location: China
  • Size: Medium
  • Reward Type: PPLNS & PPS
  • Stratum: Yes

Well, that’s all in this post. We hope that you found this post immensely useful. Thanks for visiting. We welcome your comments and suggestions.

Scroll to Top