The best way to mine cryptocurrency is using a mining pool. In most cases, people who do not get profits by mining on their own will join a mining pool. There are several advantages of using a mining pool apart from increasing chances of earning profits.
Basically, a company offering pool mining will run different mining pools if allowing people to mine different cryptocurrency with each pool assigned to mining of a given coin. A mining pool is where you and other users contribute and combine computing power in order to mine the cryptocurrency targeted but also you will share rewards.
Combining computing power increases the chance of solving blocks faster than you would do it on your own. Again, the rewards are shared by the miners. These pools are operated by companies and therefore will charge fees to operate servers etc, with different mining pools having different payment models. Most will require an upfront sign up or joining fees.
There is also the option of solo mining with some companies offering mining pools. SOLO mining is a type of mining where you mine on your own or leased hardware without contributing to a pool. The rewards then goes to you individually. You can use different calculators such as Whattomine.com calculator to figure out if it will be profitable.
But basically, it depends on your hash power and mining rigs used. Depending on difficulty, you would be recommended to mine Ethereum Classic, Musicoin, Ubiq, and Expanse coins using SOLO options rather than mining the likes of Ethereum and Bitcoin.
Reward schemes used by different mining pools
Different mining pools also implement different reward system or schemes as discussed below:
PPS -- Pay Per Share where each submitted share is worth a certain amount of coins and is a risky system for pool operators.
The RBPPS system or Round-Based Pay Per Share system works like PPS but the payouts are delayed until a block is found and confirmed by network. Earnings aren't paid to an orphaned block.
Prop system refers to distribution of rewards among all workers proportionate to the shares each one of them has found in the block.
DGM means Double Geometric Method, and which refers to a hybrid between PPLNS and Geometric reward types that enables the operator to absorb some variance risk. The operator will receive a portion of payout on short rounds and will return it on longer rounds to normalize payments.
The PPLNS means Pay Per Last N Shares and is similar to proportional but instead of looking at the number of shares contributed in the round but looks at the last N shares, regardless of round boundaries.
Ethereum mining pools
There is already a beginner's guide on how to mine Ethereum here. Ethereum will also be switching to a hybrid Proof of Work and Proof of Stake system before switching to a POS system finally in 2018. The POS will allow mining through staking Ethereum. The switch is likely to affect mining generally even as 2.5 million GPUs are used to mine Ethereum.
For now, below are some of the most popular Ethereum mining pools you might intend to use.
Ethpool and Ethermine are very popular among the Ethereum community, are the biggest mining pools and manage 25% of the total network hash power. They currently have more than 60,000 miners using the platform.
Ethpool pays rewards immediately after 10 confirmations and charges a fee of 1 percent. It has servers in Europe, Asia and North America. According to their website, they support all the Ethereum miners including qtMiner, cudaminer, eth-proxy and Ethminer and works on Windows and Linux AMD as well as Linux AMD and NVIDIA.
Ethpool also supports different miner software including Phoenix Miner, EthMiner, and Claymore Miner. It also features support for third party Android and Monitoring app. With EthMine, the payouts are instant and the user receives his ETH as soon as they reach their configured payment threshold.
Miningpoolhub contributes 7,6% of the total hash rate of the Ethereum network and constitutes of professional Eth miners. It charges a pool fee is 0.9% and thus one of the lowest in the market. The company runs multiple servers that ensure a more reliable mining process.
The pool adopts the PPLNS (Pay Per Last N Shares) system meaning you earn coins not because of a higher hash rate but because you joined when their pool find a block. This mining pool allows you to mine several other coins (about 34 coins) including Bitcoin, Bitcoin Cash, Bitcoin Gold and Private, Dash, Litecoin, ZCash, Ethereum Classic.
The pool supports ASIC, GPU(AMD & NVIDIA) and CPU hardware and different software according to the coil pool on their page. After downloading, you simply set up the server address, port no (each coin has a different port number and the typpe of number depends on the number of algorithms and auto switching features), pool username/worker name and wallet address(you can put it later).
You can also set up your miner for multi-algorithm mining by using two port numbers -- meaning you will be mining several coins in the same algorithm. Multi-algorithm automatically switches algorithm based on the most profitable reward by time and is for GPU miners.
Miningpoolhub even lets you do auto exchange for the mined coins using an Auto Exchange.
F2pool, which was founded in April 2013 in Beijing, and is world's largest integrated digital currency mining pool, lets you mine different cryptocurrencies including BTC, LTC, ZEC, ETH, ETC, SC, DASH, XMR, XMC, DCR, XZC, and XVG. The pool contributes over 25 percent of hash rate of network and is a very reliable option in Asia.
It uses Stratum mining protocol and features a mobile app to monitor the pools, and it offers daily automatic payouts and minimum withdrawal of 0.001 BTC, 0.01 LTC, 0.01 ZEC or 0.1 ETH. The pool also features advanced technology with efficient anti-DDoS ability.
The pool fee is high at 4 percent although they offer ZERO fee for mining BTM, ZEN and XDAG.
Nanopool is a common platform for ETH mining, generating over 13% of the network hash rate. It also allows you to mine many other coins including Ethereum, Ethereum Classic, SiaCoin, ZCash, Pascal and Monero. It uses DaggerHashimoto algorithm and users can mine ETH, ZEC, ETC and XMR for a 1% fee and get paid through a Pay Per Last Share system and SC, PASC and ETN for a 2% fee.
The current mining hash rate for Ethereum is 37,615.5 Gh/s and the number of miners are 68,005. Ethereum mining servers are located in Europe, U.S., Asia, Australia and Japan.
The default minimum payout threshold is 0.2 ETH although you can raise it to 20 ETH. Although you are able to mine with CPU, they recommend using AMD GPU driver 15.12 to raise the rewards.
Mining Ethereum with Nanopool requires you to have a GPU, 4+GB RAM, Ethereum account and GPU Besides this, you can rent hashing power such as from NiceHash and point it to a pool. The minimum hash rate to participate is 5 Mh/s. It supports Claymore DualMiner, Genoil and Finminer software for Windows NVIDIA. You can also mine directly to your Eth wallet or on any exchange.
Dwarfpool accounts for 4.3% of the total hash rate and lets you mine Monero, Eth, ZCash and Expanse, using stratum pool engine, and implements auto-payouts once an hour with miners that have DDoS protection. This pool does not need you to create an account in order to mine any coin: you can start off with your wallet as a login in your mining software and then you can use password or email if you want to monitor mining rigs.
Dwarfpool employs RBPPS meaning round based pay per share, where each submitted share is worth a certain amount of coins. When the pool finds a block, it will distribute rewards among all workers proportionally depending on how many shares each of the users has found.
For Ethereum it's 350 blocks (ca.1-1.5 hours), for expanse 90 blocks (ca. 1.5 hours). Shares are calculated within the next hour if no block is found during the present hour. Dwarfpool charges 1% fee and has a true round based payment system proportional to the user's share.
2Miners is a relatively new mining pool for Ethereum and some other over 15 altcoins in different pools with different hash rates. As examples of the PPLNS system, the Ethereum mining pool has 1720 miners online presently and offers a hash rate of 692.81 Gh/s and a minimum payout of 0.05 ETH. The network difficult is 3.47 Ph. The Ethereum Classic mining pool of 346.84 Gh/s hash rate has 892 miners online and a minimum payout of 0.05 ETC.
The Ethereum Solo pool has 124 minrs and provides a hash rate of 374.41 Gh/s. 2miners fee is 1.0% on the block rewards.
Ethfans is a Chinese project that accounts for 8.6 percent of overall network hash rate. It has a minimum payout of 0.1 ETH and has servers in North China and Guangdong. Ethfans charges a fee of around 1% and uses the PPLNS system and stratum miners.
The mining pool features an Android mining pool monitor that allows you to view the mining hashrate of the pools, the average and the reported hash rate. You are also able to see or monitor the unpaid ETH balance, access rounds chart, estimated earnings in ETH/USD/CNY/BTC, exchange rates, workers' list and last payout transactions.
Weipool also does not require registration to mine and you can also use the SOLO option to keep all blocks and revenue to yourself. You can also withdraw the earnings within 24 hours only and you need to earn at least 1 ETH to withdraw. It lets you use a web-based user interface for mining Ether coins with the help of ethminer. It charges 1.5% fee.
MaxHash which has servers in the US, Europe and Asia and charges fees only when the pool brings profit and offers various promotions. MaxHash also lets you mine ETH, UBQ, EXP and MUSIC coins and supports Stratum. The pools currently use servers in U.S. and EU and these have DDOS protection. The pool features a Prop payment system and a Variable-Fee system-based on pool performance.
The minimum payouts, which depend on the crypto being mined, are 0.025 ETH, 0.5 UBQ, 0.25 EXP and 25 MUSIC. Payments are also made every 10 minutes.
Coinotron which allows users to mine multiple coins (ETH, ETC LTC, VIA, DASH, FTC, VTC and PPC) using ASIC/GPU cards, and pays out every two hours. The fee depend on the reward system used: RBPPS, PPS, PPLNS or Prop. For ETH, the PPLNS system is 1 percent after 200 confirmations with tx fees, uncles and uncle included.
The RBPPS payment system is 2 percent after 200 confirmations with fees included. The hash rate for ETH is 1.8 TH and difficulty is 3.442 P, and there are a total of 2341 miners on the network. You can also merge mine DOGE when mining Litecoin. The mining pool has automatic payouts every 120 minutes, supports stratum in all pools, and provides charts for monitoring.
CoinMine which allows users to mine different coins and charges 1 percent fee for rewards.
Tips on selecting a mining pool
There are many issues in relation to choosing a mining pool including the fees they charge, the dependability, whether they pay rewards on time, and their quality.
1. Infrastructure compatibility
Not all mining devices will be compatible to the targeted mining pool. For instance, some will be compatible with CPUs, other GPUs and others with smart phones. Again, a pool may not support use of mining software packages although most should advise what software you can use and have their own. Depending on the pool, you may also need to have a given minimum network connection speed to the pool server.
2. Task assignment mechanism
Different pools will use different methodologies to assign work to miners. Some pools have stronger miners than others and pools use algorithms running on the server to distribute mining tasks evenly to miners.
And because different miners have varying capacities across the network, most mining pools use an algorithm that assigns more difficult tasks to stronger pools and easier ones to weaker pools to ensure uniformity in average communication frequency to the different miners on the network.
A mining pool algorithm will ensure balanced flow of hash data to the pool server which ensures correct measurement of the hash rate generated by the miner so each miner will have a fair chance of getting rewarded.
The uniformity in hash tasks assigning by the pool server is an important consideration when choosing a pool. For instance, some disadvantages might accrue if a pool that prioritizes high-speed devices because even those later become obsolete and new ones pop up.
3. Pool fees structure
Some pools will charge a nominal fee for using a mining pool service and the fees will depend on the pool. That said, different pools have different formulas for computing the fees and may include various charges. Some have limited time offers when they charge no fee at all but may charge fee later.
Others may waiver fees in the place of requiring you to host and run the software on your own device instead of running it on their pool servers. This makes it a high-cost input for the miner.
4. Pool transparency at operator level
Transparency touches on things such as the disclosure of the total hash rate, fair distribution of tasks, and sticking to lower payouts.
For those looking for transparent mining pools, you might check for those that provide real-time dashboard view to miners and those that have other methods to satisfy and answer questions2 that miners are concerned about.
5. Payout threshold and frequency
Reaching higher thresholds when mining with low-end hardware devices may take longer and therefore it might take longer before you get paid. That's because you will have a lower computational output and thus lower earnings. The same applies to payment frequencies.
Therefore, you might want to find mining pools that have lower thresholds and pays more frequently.
6. Pool stability and robustness
The security of a mining pool is a very important consideration when joining a mining pool because with increased pool activity today, there is increased vulnerable to DDoS attacks.
Besides the mining pool offering a secure connection as opposed to an open connection, it should repeal any attacks when they happen.
7. How large should be a pool? Will size matter?
Although the size may not matter, the number of coins mined in a pool at a given time is proportional to the computing power of the pool. So time does matter. However, the size of the pool may not matter for finding blocks over longer periods of time and success rate remains same across different sized pools.
Larger pools will have a higher probability of finding blocks because they have larger computing power than smaller ones that may need to wait longer.
A smaller pool that offers higher payout may be a right choice if you are good with irregular payouts over long periods of time. However, if you need steady income with a high-probability, low-payout schemes may be opt for a larger pool.
Again, larger pools may be more trustworthy to some extent because that would be the reason for its use by a large number of people.
Besides this, a network is better maintained in a true decentralized mannerwhen a large number of smaller pools are used for mining rather than a smaller number of large pools.
As you might guess right, there will be some risks of concentrating hashing power through a few large-sized pool servers. One such a problem is a high risk of hacking and the fact that network bandwidth may become clogged. This is a very common problem observed on blockchains.
Keeping a blockchain trully decentralized means distributing the power to as many pools.