Mining crypto is fast becoming a popular way to make extra income for many users. As participants join the crypto mining train, many continue to reap the rewards for participating in keeping various blockchains secure and functional.
Traditionally, participants use three different types of mining. These types are solo mining, pool mining, and institutional mining. In this guide, we explore pool mining, how it works and how to select the best pool for your mining needs and more.
Mining Pool Definition
A mining pool results from individual miners putting together their equipment, knowledge, and skills to achieve higher computational speeds and produce blocks faster for different blockchains.
Crypto mining requires a specific set of equipment, such as an AntMiner or at least a GPU, which is costly to acquire if you’re on your own. Pool mining brings together like-minded small-scale miners who gain better rewards for sharing their efforts.
In short, once a pool successfully mines a block, each member earns a reward for participation using tokens of the same cryptocurrency.
For example, if your pool mines BTC, you all receive the rewards in BTC according to the criteria agreed upon. You could all share the rewards equally or according to each participant’s efforts.
So, what should you look for in a mining pool?
Choosing a Mining Pool
Here are some key points to what to look at when choosing an excellent mining pool.
Pool Payout Method
A payout method is how you earn rewards for participating in producing new blocks for a given blockchain ecosystem.
Depending on the mining pool you’d like to join, you’ll encounter multiple types of payout schemes in the cryptocurrency field. However, the most popular payout methods are Pay Per Last N Shares (PPLNS) and Pay Per Share (PPS). Although these two methods represent a way to share rewards among pool mining participants, they have some differences.
The primary difference between PPS and PPLNS is that while PPS miners have a standard daily payout threshold, PPLNS rewards miners use a graded system.
If your mining pools reward members using the PPLNS payout method, you’re required to mine a complete block before you receive any rewards. PPS, on the other hand, pays out rewards as soon as you meet a fixed payout threshold.
Other types of payments include Pay Per Share Plus (PPS+), full pay-per-share (FPPS), pay-per-last-n-groups (PPNLG), and score-based schemes.
Every pool uses a unique fee structure to charge participants for running the mining pool. Some charge pool fees, while others only charge a percentage fee from your mining reward.
Most pool fees charged are menial but can sometimes make a difference between profitability and loss-making. Where possible, always opt for a mining pool with the lowest costs.
You increase your upside by paying lower fees because most pool mining activities don’t yield high returns, even though the pool still incurs running expenses.
However, you should know that most pools that charge zero fees also have central operations and lower hash rates. That means your mining activities will be slower, and you may earn even fewer rewards.
Ensure you choose a pool that charges the lowest fees while giving an excellent return on your efforts.
Two primary factors to consider when evaluating transparency are the pool’s hash rate and performance metrics. Also, check whether the payout scheme you receive matches what they offer their miners.
Transparency enables miners to understand how tasks are allocated and the pool shares rewards amongst pool participants. The above information should be available on pool’s user interface. Where possible, avoid mining pools with poor interfaces or interfaces that lack transparency, as you will stay in the dark.
You may lose your earnings or figure out your payout was much lower than you deserve much later.
You should also consider the regulations in your own country regarding mining pools. We’ve written specific guides for users in who want to join mining pools from Canada or Germany. These countries have distinct mining regulations.
While looking for an excellent mining pool, consider checking the size of the mining pool and computational power as critical factors for landing a great pool.
Although a large-sized pool means more miners, it’s critical to check the pool’s hash rate. A pool might have huge numbers of miners, but with a low hash rate, you will encounter the limited potential for your earnings.
A higher hash rate means your mining pool can solve the blockchain’s cryptographic puzzle faster, improving block production speeds and consistent earnings.
Also, more miners in the pool prove that the mining pool is trustworthy and improves the speed of producing a block as many participants can contribute their share of work at once.
Pool stability is a key element to consider when choosing an ideal mining pool for your needs. Stability is the pool’s security component and the possibility of downtime to its operations.
Stable mining pools ensure you enjoy consistent mining and perpetual profitability. Therefore, check the history of the pool and see if your chosen mining pool has the potential to reach the highest possible transaction throughput.
Examples of items to checkup to ensure stability include;
- Check whether the pool has a record of attacks.
- Check if the mining pool has a secure connection.
- Find out if the blockchain has any anticipated downtimes.
- How has the mining pool fended off attacks?
You can find such information on the pool’s website, forums, or news releases. Also, many authoritative websites will provide you with more details about the stability of different mining pools.
Does Pool Matter When Solo Mining?
Pool mining shouldn’t matter to you much if you’re running a solo mining operation.
As the name suggests, solo mining means you run a mining operation on your own. Therefore, regardless of the effort and mining equipment you use, you get to keep all the rewards you earn.
However, you can always shift to pool mining if you want consistent profitability and faster block production.
Which Pool Is Best For Mining?
There are many mining pools in the cryptocurrency market, each with a unique appeal to a specific set of users. So, it may be daunting to select the best out of the tens of mining pools.
Here’s our list of the top 5 mining pools you can checkout;
- Binance Pool
Check which mining pool meets your requirements for a seamless mining experience.
If you’re specifically interested in mining Litecoin, there are dedicated pools you can join. Don’t miss our guide: Is Litecoin Easy To Mine.
Are Mining Pools Profitable?
Mining pools are profitable, but not nearly as profitable as solo and institutional mining operations.
You only earn rewards for completing your allocated mining task. It’s easier to gain an upside when pool mining than when mining alone, especially with more established blockchains.
As the computation difficulty continues to grow, more crypto miners are opting to join mining pools to compete with large crypto mining companies.
What Is A Strong Pool?
If you’re looking for a strong mining pool, find one with outstanding hash rates and a significant number of participants in the pool.
As explained earlier, these two factors are significant in determining the strength of a pool. However, with varying features, fee structures, and payout schemes, one mining pool may outdo another.
Even so, participants can use unique criteria to decide what they consider a strong pool to be. While some users will find reasonable payout thresholds exciting, others will go for mining pools with stability and security or more.
Is Nicehash A Good Mining Pool?
NiceHash comes with innovative features and has one of the best hash rates in the crypto mining industry.
Established in 2014, NiceHash has continued to grow in popularity globally, passing over most industry pioneers with its new and improved features. It offers something for both crypto buyers and miners of the block.
- It supports over 30 cryptocurrencies.
- It offers a cloud mining tool for miners
- Users can use Euros.
- It’s open for any token.
- It’s a global mining pool.
- The maker and taker fees of 0.5% vary with the size of the reward and activity.
- It offers excellent customer support with live chat features, social media, and more.
- You can GPU mine on the pool.
- It has its crypto wallet called NiceHash wallet.
Can You Mine Without A Pool?
Yes, you can mine without a pool. However, it can be a restrictive affair given the costs associated with mining equipment and energy costs.
You can always run a solo mining operation where possible. Although not as profitable as institutional mining by companies, pool mining is still the best way to mine crypto.
Is It Better To Mine Solo Or In A Pool?
Pool mining is usually better than solo mining. You increase the profitability of your operation by choosing to participate in a mining pool instead of mining solo.
The best mining equipment is expensive, and consumes a large amount of electricity. Even if you have enough money to purchase the equipment, it’ll take longer to recover your capital than when you mine in a pool.
The only benefit of solo mining is this: Although it doesn’t guarantee any returns, you get to keep your entire pot of earnings once you become profitable.
On the other hand, pool mining allows users to earn regardless of the power of their mining equipment. In pool mining, miners’ earnings primarily depend on your share of tasks handled.