What exactly would you consider when selecting a suitable mining pool? The debate goes beyond fees since there are other factors including profitability, stability, payout threshold and frequency, reward distribution methods employed by a pool and the reputation of the pool.
Here we look at those factors in more details.
Among the factors you should consider when selecting a crypto mining pool are; what infrastructure it has, to ensure the pool does support the mining hardware you already have including: GPUs, CPUs, ASICs and smartphone-based mining, especially since different pools support different miners.
Besides, some pools do not support all mining software packages although the software, in most cases, is selected once a pool has been determined and you might need to use software that is compatible with the pool. Some pools also require users to have a minimum network connection speed to the pool server and might also need to verify against the internet speed available to the miner.
Among the largest crypto mining pools with the highest hashrate share, BTC.com supports ASIC, GPU and CPU mining options depending on the coins you want to mine; Antipool supports GPU; F2Pool supports CPU and GPU and no ASIC; Slushpool supports only ASICs; Poolin lets you mine with ASICs, GPUs and CPUs as is the same case with ViaBTC; while Bitcoin.com lets you mine BTC and BCH with ASICS.
2. Mechanism for task assignment
Using pooling algorithm, pool servers use different methodologies to distribute or assign work to miners. Most pools use Vardiff (Variable Difficulty Algorithm) to assign exactly so much work to each miner which assigns exactly so much work to each miner that allows it to send back results or a given range of shares per minute to the pool say 16 to 20 times per minute or 4-10 shares per minute.
With this method, the balanced flow of hash data to the pool server ensures correct measurement of the hash rate generated by the miner, and therefore, each miner has a fair chance of getting rewarded.
The uniformity of assigning tasks to miners irrespective of the mining power of any miner is important. If for instance, a pool task assignment prefers more powerful or high-speed devices, it means not equal opportunity is provided to those with less powerful devices.
With Vardiff, the number of shares rise or fall depending on the miner's hashrate.
The share being the calculated amount of work that your miner actually did or hashes it computed towards finding a block, and depending on the payment mechanism, the more shares accepted the higher the payout.
The traditional method of assigning miners work involves an algorithm assigning members work comprising of a particular number of nonce or the number that the miners are computing for. When the miner completes the assigned work, it can then place a request for a new work unit. The alternative allows pool members or miners to pick and choose as much work as they like without any assignment from the pool. In this case, different miners work on different range of nonces.
Other methods include Dynamic, User/Dynamic, Dynamic 20SPM, Diff 1, Dynamic 18SPM,
3. Pool Stability and Robustness
The security of a mining pool is a very important consideration when looking for who to mine with in a pool. Today, most mining pools offer protection for DDoS attacks among other security features. Besides protection from hacks, there may be other concerns such as pool hoping and attack from malicious miners, sabotage attacks where miners may withhold and submit partial solutions and the entire pool keeps losing money -- in some cases a malicious miner could do so if they own a competing pool, "lie-in-wait" attacks, pool centralization which may mean users will keep worrying about 51% attacks, and many other concerns such as those mentioned in this article.
In addition to security, there are other factors that would affect a pool's stability such as its' management. Most of the reputed pools are stable and will see you mine consistently and without any much problems. Pools with multiple users, development aspects and loyal users are likely to commit resources to growth and collaboration for continuous technical improvement.
Sometimes politics of the day can affect mining operations such as happened in 2017, so if a pool has servers in a single geographical location, it may be a problem in some cases in case there are unstable politics affecting cryptocurrency in such a region.
4. Payout threshold and frequency
The payout threshold is the amount attained in mining before being sent to the address, and differs from one pool to another. In many cases, threshold even within a given pool will vary and depend on the cryptocurrency being mined. A good example is with F2Pool where different cryptocurrencies have different threshold with BTC threshold being 0.005, LTC is 0.02, and DASH and ETH is 0.1.
The payment threshold for BTC at btc.com is 0.001 BTC, BCH 0.0000546, ETH 0.01, ETC 0.01, LTC 0.001, Decreed 0.1, Grin 3 etc. BTC payout threshold at Antpool is also 0.001 btc but the default is 0.05 BTC when the payout is automatically carried out. Users can also set a higher payout if they feel that 0.05 BTC is not enough.
Some mining pool pay after a specified duration, say one hour, day etc.
5. Reward distribution methods among miners
There may be many different motivations to join a crypto mining pool and profit is one of the most prominent in any case. Given this, the way a pool distributes rewards and mining fees is therefore going to be of an important concern for a person entering mining for profit sake. For instance, depending on the payment model, a pool may award all fees to miners or not at all. One more thing, a reward distribution model will determine how your shares are treated when mining. Some will give payout for shares whether a block is found or not, others will not.
The good thing is that many pools support multiple payment models, which allow you to switch from one to another depending on your risk preferences.
There are about fifteen reward distribution models but the main ones are Pay-per-Share (PPS) and PPLNS (Pay Per Last N Shares). In Pay Per Share model. In case of the former, the person who is mining is paid a payout percentage equivalent to the percentage of share they contribute with their miners whether a block is mined or not. In other words, the miner receives a payment which is statistically probable rather than what actually occurs: in the other model, miners receive payout equivalent to percentage of shares they contribute but when the block is mined by the pool. But the payout percentage is the same even when the submitted ticket is the winning ticket.
For a pool operator, there can be a lot of risk variance in the short-run because the pool operator absorbs all the risks of variance i.e. paying even those tickets or shares that do not find the block. In this case, timing attacks by a pool operator are completely eliminated.
It is most appropriate for large pools that have a lot of reserves to afford to take a lot of variance. Examples of crypto mining pools among the top that offer PPS as a payment/reward distribution model option include ViaBTC's PPS + which is the default of the system although users can choose among others as well.
Their PPS+ is an improved version of the traditional PPS and on which mining rewards are increased. DeepBit mining pool, which is based in EU/Germany, also makes use of PPS and Proportional method of reward distribution. As mentioned earlier, proportional method awards rewards equally among all shares. USA and EU based BTC Guild also uses PPS.
The PPS ensures constant pay for as long as the shares are accepted, meaning they are submitted within the right time required to mine a block and counted towards the mining act. The proportional method pays a percentage to miners proportional to the percentage they contribute in the found block or the actual work involved in the finding of the block. PPLNS pays out when a block is found by the pool and the distribution of rewards to miners is based on a maximum set of shares and not the total number of shares during that round.
PPLN considers a fixed amount of shares (N) that is not constrained by the round boundaries and the fixed number of shares is not based on luck. Usually, N is set as twice the difficulty. The more hashes a user does the more shares they get. Unlike with PPS, This payout method pays rewards only if the pool on which a user is finds or mines a block.
The number of shares in a PPLS reward system vary based on the window of accepted shares and the window of accepted shares can pay out miners from past round even if they did not contribute to current round.
BTC.com uses PPLNS mode. Slushpool employs an hybrid PPS which pays most of the shares immediately as PPS while the rest utilize continous scoring method.
BCMonster.com also uses PPLNS, same as ViaBTC, btcZPool.com, GHash.IO, Give Me COINS, Jonny Bravo's Mining Emporium, kmdPool.org, MergeMining, P2Pool, and ZenPool.org, Kano CKPool,
DGM is used by Merge Mining Pool, Golden Nonce Pool, BTCDig, F2Pool,
BTC.com uses FPPS,
PPS is used by AntPool, F2Pool, ViaBTC, BTCC Pool, btcmp.com, and BW Mining.
Score is used by Slush Pool, and Multipool.
PPLNSG is used by BitMinter, BW Mining, KanoPool,
while CPPSRB uses Eligius.
The geometrical method is based on a mathematical model and extends the idea of Slush method used to fight hoppers. The method divides rewards into constant and variable parts. Miners receive a constant part of a fixed size as a block is closed. A variable part depends on the points that a pool operator posses at the beginning of each round. Over time, the points value decreases the same as shares of casual miners. There is no difference when to join the pool and no sense to leave it. Geometric method is used to resist pool-hoping, which is a form of cheating where a miner will only participate at the beginning of a round, when his expected payout is too high compared to his efforts and contribution to the pool.
The draw-back is that the fee collected per block varies with the length of the round and
This kind was inspired by the slush mechanism but with the difference that it introduces a novel variable fee c to address the weakness of slush mechanism. The variable fee starts high at the start of each round to then decrease over time. In this design, the expected reward of each share can be kept stable in mining pools, indicating that geometric mechanism can achieve incentive compatibility. The effect of introducing a variable fee paid by miners is to reduce the expected reward by a factor of (1-c) multiplied by the reward assigned to other pool minters in other distribution mechanisms.
The pool manager can reduce both the constant and the variable fees. This method is not as attractive as the PPS or PPLNS for the obvious reasons it comes with additional fee.
The Double Geometric Method (DGM) seeks to improve on these aspects by combining the PPLNS and geometric mechanism.
Double Geometric Method [DGM]
DGM is based on a combination of PPLNS and Geometric reward types where the pool operator removes some of the variance risks by receiving a larger portion of payout when blocks are found faster than expected and returns a bit when they take longer time to get discovered. In DGM, a score is set or assigned to each of the moners in the network and the payment is calculated based on that score. The scores can be carried over as rounds get completed but vary based on level of difficulty of the previous blocks. The loner the rounds between each block, the higher the score the user can transfer. Shares decay in geometric sequence in this model and therefore this is considered a geometric method. In other words, the score decreases when a block or share is found. A rescaling mechanism can be used if a user has too high of a score. This awards users a small score during short rounds and the score can accumulate dur
Double geometric method: Hopping-proof, low-variance reward system
Double geometric method combines PPLNS and the geometric method to render benefits of both. PPLNS is applied to provide reward to miners in a share-based economy, without operator risk, and then the system switches to a decreased pool-based variance which can be done by geometric method and not PPLNS. The expected payout share is the same regardless of when it was submitted.
The time it takes to receive rewards or maturity time and the variance do not depend on the pool's history and are independent of future difficulty changes. The method is score-based in that a single score value per participant can be assigned and used to calculate payouts meaning the system does not need to keep a history of shares. However, since the scores would grow exponentially, a logarithmic scale is used to store their values and to do calculations.
DGM has a fixed fee and average variable fee in DGM similar to those in geometric mechanism and there is also a cross-round leakage parameter in DGM to balance the variance of miners' revenue and pool manager's risk. In this method, when a new block is found, the PPLNS aspect maintains the miner's scores unchanged while the geometric mechanism will set all the scores to be 0 and transfer them to the pool manager, but DGM compromises and transfers only part of the scores to the pool manager.
The manager will get a large portion of the scores when multiple new blocks are mined, which reduces the impact of the miners' reward variance caused by luck. DGM becomes geometric mechanism when the cross-round parameter is set at 0 and when the parameter approaches 1, DGM becomes a variant of PPLNS.
Score based system
The Score-based method is a type of proportional system that is weighted by time submitted. Shares gain more worth as a function of time since the start of the current round, which means those shares submitted later are much more worth than earlier shares. In this method, the score decreases quickly when a person stops mining on the pool.
Examples of mining pools using this reward distribution method include Slush pool.
Maximum pay-per-share (MPPS) solution per
Reward distribution mechanism dictates how a mining pool distributes mining rewards. Among the 10 crypto mining pools, which also control 93% of the total computational power, most of them use different reward distribution method with fairness being a key issue to consider when adopting a reward distribution method. Incentive-compatibility is considered as a good evaluation metric to analyze fairness in many mining pools.
Proportional method splits the rewards according to the proportion of shares a miner submits in the all submitted shares in a round. When a block is found, the pool manager substracts a fraction from the reward and shares the rest proportionately to other miners. The number of shares submitted in a round are countable although the length of any round cannot be predicted. The amount of reward in each share is therefore affected by time. Since the mechanism is not incentive compatible, it may lead to a number of problems such as delay submission problem where the proportion of a miner's submitted shares in all the submitted shares within a round is less than the proportion of the miner's mining power in the mining pool's mining power. In this situation, the miner may gain more benefit by holding a full solution..
Slush helps deal with pool hoping problem and it measures mining power or computing power for each individual miner by assigning a scoring hash rate instead of simply counting submitted shares. Since the value of shares decreases as time goes on, the value of shares submitted later is higher than those submitted before them.
What is pool hoping? Pool hoping is one of the most vulnerable weaknesses of the proportional mechanism. In a mining pool, the longer a round is the more the shares are submitted but as the number of shares increase, the value of each will decrease. This may encourage rational miners to switch among miners to gain rewards as many as possible -- these miners choose to mine when expected reward is high and leave when it is low, thus they mine within short round and leave when reward reduces.
The threshold of its occurring is when number of all submitted shares is 43.5% of the difficulty level and they mine when the total number of shares is below this threshold and leave when it surpasses this. Pool hoping may lead to honest miners losing their deserved profits if the rational miners can earn higher rewards by hoping than remaining in a pool.
Slush method assigns more weight to shares submitted in the late period of each round and aims to make the expected reward of each share equal. It uses an exponential function to calculate the score of a share s at time t0, i.e.,
C(s, t0) = e(τ(s)−t0)/λ
where λ is a parameter controlling how fast the score of a share declines in time. The lower the value of λ, the faster the decline is.
The mechanism distributes rewards among pool miners by calculating each miner's contribution to the pool using the ratio of the miner's score to the pool score. One drawback of this mechanism is that the stable mining status is reached some time after a round starts. Thus this method may not guarantee incentive compatibility.
ELIGIUS, which was designed by Luke Jr., creator of BFGMiner, to incorporate advantages of Bitcoin Pooled mining (BPM) and PPS. In this case, miners will submit proofs-of-work to earn shares and the pool will pay out immediately.
The block rewards are distributed among all shares submitted since the last valid block while the shares contributed to stale blocks are cycled into the next block's shares. The miner is rewarded only if they earn at least. 67108864 and if the earning is less, it is rolled over to the next block till the limit is reached. The pool will send any remaining balance regardless of its size if the miner does not submit a share for over a week.
Bitcoin Pooled mining (BPM), also known as “Slush’s pool,” prioritizes more recent shares by giving them more weight in order to reduce ability to cheat the mining pool system by switching pools during a round.
The Capped Pay Per Share with Recent Backpay uses a Maximum Pay Per Share (MPPS) pays Bitcoin miners as much as possible using the income from finding blocks but will never go bankrupt.
Solo mining is opposite of pool mining but users mine individually but some will connect to pools to submit their shares directly to the blockchain through that pool. This may be regarded as solo pool mining? And of course, they do not share rewards; you mine the blockchain and get full block rewards and fees although when you connect to a pool you basically pay some commission to that pool.
Many large capacity miners who can work in solo mode prefer to connect to already working pools (nodes) that provide solo mode mining, taking a small percentage of this service. In a mining pool that supports solo pool mining, the reward minus fees to the pool, goes to the single miner whose hashing job found the block. A good example is solopool.org that supports solo mining for more than 40 cryptocurrencies. The model is rare though and is preferable to those with adequate resources to be able to find blocks regularly on their own.
Full Pay Per Share (FPPS)
It is similar to PPS but also divides block rewards as well as transaction fees. It calculates a standard transaction fee within a certain period and distributes it to miners according to their hash power contributions in the pool. It will increase the miner's earnings by sharing some of the transaction fees.
Shared Maximum Pay Per Share (SMPPS)
SMPPS works like PPS but never pays more than the pool earns.
Equalized Shared Maximum Pay Per Share (ESMPPS)
ESMPPS works like SMPPS but distributes payments equally among all miners in Bitcoin mining pool.
Pay On Target (POT)
Pay On Target (POT) is a variant of PPs, which rewards miners based on the difficulty of work returned to pool rather than the difficulty of worl served by pool.
Recent Shared Maximum Pay Per Share (RSMPPS)
This system prioritizes most recent miners first in the sharing of mining rewards.
Pay Per Last N Shifts/Groups (PPLNSG)
Pay Per Last N Shifts/Groups (PPLNSG) is same as PPLNS but the shares are grouped into "shifts" which are then paid as a whole.
6. Pool Size and reputation
Bigger and more established pools offer more regular payments although the payout may be smaller because it is shared among many more members. In comparison, smaller pool that offer less frequent payments but larger payouts.
7. Pool Fees and profitability
A pool having a high percentage of hashing power in any network indicates the likelihood of that pool to mine a higher number of blocks, and high hash rates translate into lower variance of profits over time. Those with lower hash rates risks mining low number of blocks, which means it may be hard to get any good pay in the end of the day. More profitable mining pools are consistent in paying miners and sometimes this is a function of reputation.
Fees vary from one pool to another, with fees ranging from 0% to 4%, and you can refer to the table below provided by CryptoBtcMining website for fee charged by different pools.
BTC Pool is run by Bitmain, which also operates Antpool. It was founded in 2015 and has operations in China, Europe, and the United States.
Antpool is located in China. Run by Bitmain which also operates BTC Pool, it has been in operation since 2016.
ViaBTC is located in China. One of the world’s largest mining pools, it was launched in 2017.
Slush Pool has operated since 2010. It operates globally, and was the first organized mining pool for Bitcoin.
F2Pool is a diverse mining pool which can mine numerous cryptocurrencies and has operated since 2013. It is also known as Discus Fish.
BTC.top is a private pool and not open to public participation. It launched in 2016.
Bitclub is a mining pool which has been accused of operating a cryptocurrency ponzi scheme. Its reputation has taken a significant hit.
BTCC is one of the largest mining pools in China. It also operates in Japan and launched in 2014.
Bitfury has operated since 2014 and is a private pool which cannot be joined.
Launched in 2017, 58Coin operates out of China.
Bitminter operates in the United States, Europe, and Canada. It was launched in 2011.
Kano CKPool operates in countries across Europe and Asia and was launched in 2017.
A moderate sized pool, BW Pool was launched in 2014 and operates in China.
BCMonster is one of the smallest mining pools in operation, although it has operations in the U.S., Europe, and China and was launched in 2013.
Although recently closed, BTC Guild deserves mention on this page due to the fact that over the past year it mined a significant share of all bitcoins.
GHash is a Dutch mining pool which was launched in 2013.
Bixin is a Chinese mining firm launched in 2014.
DPOOL is a firm launched in 2018. Its servers can be accessed from Asia, Europe, and North America.
GBMiners is an Indian firm. Although reviews claim that it is one of the fastest growing pools in the world, it was launched in 2016 and remains a small share of the total Bitcoin hashrate.
BTPOOL is operated by Bitmain, the same firm which owns BTC.com and Antpool. It was launched in 2017.
Bitcoin.com’s mining operation was launched in 2017 and, due to its domain, is one of the most well-known mining pools.
WAYI.CN is a Chinese mining pool that was launched in 2017.
CanoePool, not to be confused with KanoPool, was launched in 2017 and operates in the United States.
Poolin is a mining pool launched in 2018, out of China.
8. Pool transparency, freedom, decision-making, administration aspects and additional features
The transparency and trustworthiness of mining pool operators with regards to the assigning of tasks, quoting of payouts, making payments, and others. Mining pools can implement a variety of measures to ensure real-time transparency including dashboards through which users can view miners, hashrates and other details/information. Besides, mining pools can also provide support for users who have queries relating to their mining pools.
For that reason, you may pay attention to interfaces and user panels if they provide performance metrics for your ASICs, GPUs and CPUs or other mining hardware. They may provide stats about hash rates, variation in payment amounts, network difficulty etc. Most pools provide graphical details to help their users prepare for any happenings or to invest more. Most user panels and interfaces will perform calculations and deliver reports about user's mining activity and even notifications.
In addition to providing internal data, published data about the pool may be necessary for transparency: for instance at Slush Pool, users confirm that each one is getting appropriate and proportional profit according to the precise hash rate that his/her ASICs bring to the mining pool for each mined block, which is made possible through the "Hash Rate Proof” feature. Users are also interested in those pools that can report failures, present improvements and development plans for new features, and have clear plan towards the future.
How the pool decides modification, deletion or addition of parameters to the pool is an important issue: is there voting? What options does a user have when connecting nodes? Do they have options for clients used or will they have to move to another pool anyway because for instance there are no client of their choice to connect the nodes? Are there options to mining their prefered coins?
Regarding transparency, there are various websites in addition to the tools provided by the specific mining pools, to help you gain information and data about what to expect when mining with a particular pool. Example of these websites include PoolProfit.io, CryptoCompare, and WhatToMine just to mention a few.