ViaBTC Guide | Things about Mining Pools That New Miners Need to Know
Amid the bull market, cryptocurrencies are receiving widespread attention. At the same time, venture capital seems eager for action, institutions enter the market, and technology giants keep investments, followed by a great number of individual investors. They are all looking for investment opportunities after the COVID-19 epidemic.
Given that many new investors are strangers to mining pools and relevant obscure concepts, ViaBTC has prepared this issue to get them aware of how the mining pool works and the main settlement methods among the existing mining pools.
Q1: What is a mining pool?
The concept of “mining pool” originated from Bitcoin. As we know, due to the low hashrate of the Bitcoin network, mining was not that difficult at the very beginning, and even an old desktop computer would suffice. Yet as Bitcoin has gained increasing consensus and miners, the hashrate of the entire network climbs, making it hard for individual miners to stably obtain block rewards on the Bitcoin network due to their low hashrate. That was the time when several of them considered gathering their hashrate for pool mining. Some institutions/platforms got inspired, and tried to integrate small hashrates, which led to such a hashrate integration system called the “mining pool”.
In a “mining pool”, individual miners, regardless of their hashrate, can benefit from such pool mining, and their income is directly determined by the settlement method.
Q2: What are the major settlement methods among the existing mining pools?
There are five major settlement methods, respectively, PPS, PPS+, FPPS, PPLNS, and SOLO.
PPS (Pay Per Share): Mining output is about probability, and the ratio of actual income to expected income is called the luck value. If the luck value is greater than 100%, it means the actual income of the mining pool is better than expected and vice versa. PPS is a distribution method that prevails when the luck value is 100% of the theoretical income. In other words, under PPS, the mining pool bears all the risk of fluctuations in mining output: it still needs to pay miners the due income even without blocks generated that day. In return, miners need to pay the mining pool some transaction fees.
In general, this method is characterized by “stable income regardless of the market conditions”, which is also dubbed the “employee mode” by miners.
PPLNS (Pay Per Last N Shares): This method calculates payments based on the number of shares miners submitted on the pool. Miners’ income is closely related to the actual amount of blocks generated in the mining pool. When a new block is mined, the mining pool will first deduct the transaction fee, and then distribute the remaining block rewards and miner fees to each miner in proportion to the contribution of hashrate.
If the mining pool generates a lot of blocks in a day, the profit in this mode could be considerable. But if without any valid block, the miner will gain no profit that day.
PPS+ (Pay Per Share+): The “+” here means the miner can additionally obtain miner fees from the mining pool. In fact, PPS+ is optimized on the basis of the PPS model. In other words, another part of the income is added to the PPS model: the miner fees obtained by the mining pool are distributed according to the proportion of the miner’s hashrate.
FPPS (Full Pay Per Share): Compared with PPS, in this mode the miner can enjoy additional mining income. Yet there is something different. In the PPS+ mode, the additional miner fees are distributed on the basis of the miner fees obtained by the mining pool, while in the FPPS mode it is subject to the average ratio of miner fees of the entire network on the day. As a result, the mining income varies with the different distribution rules of miner fees between FPPS and PPS+, settlement methods and mining pools.
SOLO: In the SOLO mode, miners work independently and will get all the block rewards with corresponding transaction fees deducted. If no blocks are generated, the miner will gain no income. So SOLO is more suitable for miners with a high percentage of hashrate, yet remains not that friendly to those with ordinary hashrate.
The above are the main settlement methods among the existing mining pools. Of course, the specific income also depends on the percentage of the mining pool’s hashrate and the overall operation and maintenance capabilities.
Q3: How to choose a good mining pool?
This bull market has given birth to many institutions in the industry, including incubators, exchanges, media, project developers, mining farms and mining pools. What factors need to be considered for new investors/new miners when choosing a mining pool?
First of all, you need to choose a mining pool with a larger percentage of hashrate. Such mining pools enjoy overall strength, partnerships with large mining farms, and trust from the majority of miners. Mining pools with many years of good reputation generally have a long history;
Second, choose one with a good reputation. Good products and services bring good reputation, which reflects a mining pool’s overall strength and its resources accumulated in the industry;
Third, choose a mining pool that offers much convenience in mining, withdrawing and selling tokens, which is particularly important in extreme market conditions.
All the above make ViaBTC Pool a preferred option. Having engaged in mining for the past four years, it has been one of the top mining service providers in the world. Committed to the concept of security, transparency, fairness, and freedom for all these years, ViaBTC Pool respects the needs of the market as well as the majority of miners, integrates industrial resources, and has rolled out services such as selected mining farms, hedging, staking, and mining companies, which are deeply concerned by the industry and unanimously recognized by miners.
It is worth mentioning that ViaBTC allows miners to automatically withdraw mining income in the extreme market, free of transaction fees, a function well-received among miners. All the mining income can be automatically, once in an hour, converted into USDT and BTC on the automatic exchange page. Miners can also manually exchange the mining income according to their needs.
If you are a veteran with some knowledge of ViaBTC Pool, you may be aware that our products, services and functions are designed to meet the diversified and personalized needs of miners and investors in general. If you are a newcomer to this field, it is suggested you follow updates of ViaBTC so that you won’t miss the latest “ETH Mining Carnival” event where you can mine ETH without transaction fees and can even enjoy an additional 2% of income for new hashrate. There will be more surprises and exciting events, and we sincerely hope to embrace the era of the digital economy with all miners.