What is mining?
A fundamental element of difference between cryptocurrencies is what consensus protocol they use to create and validate new blocks. The Proof of Work protocol is the most popular consensus protocol used by leading blockchains such as Bitcoin and Ethereum to validate and create new blocks of transactions. In blockchains that use Proof of Work, every node on the network is competing with one another to guess an enormously large number called a hash value as a way of verifying the transactions on the network. Nodes put up huge processing efforts to solve this difficult math problem and as a reward, they are paid a predetermined amount of the native cryptocurrency of that blockchain like Bitcoin or Ethereum. The more nodes there are on the blockchain, the more difficult it becomes to verify new transactions since the majority of the node’s population must confirm the authenticity of the transaction. Consequently, mining new blocks becomes more difficult and requires more advanced hardware which most individuals cannot afford. Mining pools are one of the most popular and effective solutions for mining enthusiasts.
What are mining pools?
Since the process of mining new blocks is essentially an arms race for guessing astronomically large numbers with actual winners and losers, it is wise for small miners to put their resources together and cooperate in guessing the hash values and collecting rewards. Mining pools provide users with cooperative efforts to make consistent revenue by dedicating their hardware to mining cryptocurrencies like Bitcoin. Mining pools coordinate the miners’ resources to prevent them from wasting their time and energy to guess the same block. The rewards are then distributed among miners based on one of a multitude of methods such as PPS, PPLNS, PPLNSG, Score, etc., which we briefly describe only a few of them. Each miner is paid based on their portion of contribution to solving a block. The Pay per Share scheme or PPS rewards a fixed amount for every share they’ve submitted. Share is a unit used by mining pools for calculating the work done by each miner. The PPS scheme rewards miners whether a block is solved or not. This is a risk burdened by the pool which is why the PPS-based pools charge a considerable fee for their services. Contrary to PPS, the Pay per last n share scheme or PPLNS will only reward its miners if a new block is solved. After a new block is solved, the pool rewards miners based on their last n contributed shares by dividing the number of contributed shares by n, then multiplying the result by the block reward, minus the pool’s cut. The n varies depending on the pool. In the Score reward scheme, the reward is proportional to the submitted time, not the shares. For each submitted share, the score is updated like this: score += exp(t/C). C depends on the pool, for example at Slushpool C=300 seconds, and scores are normalized every hour.
An overall view of the most popular Bitcoin mining pools
FoundryUSA is one of the very few big-time mining pools that’s headquartered in the USA, meanwhile sitting on over %23 of the current total hashrate of the network and occupying the top spot on that list. While small miners can use its pool, the main target of FoundryUSA is big-league organizations or individuals with large hashrates. The mining pool uses the FPPS scheme and charges a %0 fee. There is also the possibility for staking cryptocurrencies via FoundryStaking and also trading mining gadgets in FoundryX.
Known for its diversity, transparency, and security, BTC.com is one of the leading mining pools with a user-friendly platform. BTC.com is an open-source platform which is a major contributor to its legitimacy and credibility. BTC.com is one of the largest Bitcoin mining pools in the world and was acquired by Bitmain in 2016 which has been operating the pool ever since. BTC.com rewards by the FPPS payment method and charges 1.5% with a 0.001 BTC payment threshold. The users’ stats are ranked in the platform based on merits like their hash rate, power consumption, and daily profits.
Has been Established in 2010 and run ever since, Slushpool was the world’s first Bitcoin mining pool and has mined nearly 1.3 million Bitcoins since its inception. It was first called Bitcoin.cz and was founded by Mark “Slush” Palatinus and the creators of the Trezor wallet. The mining pool was then taken over by Braiins and was given its iconic name. Slushpool has a beginner-friendly interface and even provides users with a demo account to familiarize users with the platform. The score payment method which showcases the exact computer power that’s being contributed to the mining pool significantly reduces the risk of cheating.
According to insights.braiins.com, F2pool ranks third in terms of hash rate distribution, commanding 14.8% of the network’s overall hash rate in the last three months. Also known as Discus Fish, F2pool covers over 2 million miners and since there’s a daily automatic payout, F2pool is recognized as an amazing solution for making passive income for miners. F2pool also supports the mining of coins such as Litecoin, Ethereum, and Zcash.
Antpool ranks second in terms of hash rate distribution, commanding %19.04 of the network’s overall hash rate in the last three months. Launched in 2014, Antpool provides mining capabilities for not only Bitcoin but 40+ other cryptocurrencies such as Litecoin and Ethereum. Similar to BTC.com, Antpool which is a Chinese mining company is operated by Bitmain Technologies. Antpool provides users with one of two options: either go with the PPLNS payment method and pay a %0 fee or go with PPS+ and pay a %4 from the block reward plus a 2% transaction fee. Miners are connected to their nearest location geographically of which Antpool has many around the globe.
Launched in 2016, ViaBTC is one of the largest Bitcoin mining pools, commanding over %11 of the total mining hash rate of Bitcoin. Litecoin and Bitcoin Cash are also among the other cryptocurrencies available for mining in ViaBTC. Miners can either go with the PPS scheme and pay a %4 fee or go with the PPLNS method and pay only %2. ViaBTC operates on a daily payment basis and in addition to a mining pool, offers crypto loans, a decentralized exchange, and a multi-currency wallet. The platform is easy to navigate and you get real-time status of the hashrate and miners.
Poolin is a very young mining pool and was established in 2018, but that didn’t stop it from occupying the 6th top position of the total hashrate in the network. With its merged mining feature, miners can dedicate the same computation power to mine a multitude of cryptocurrencies including Bitcoin. It uses the PPS payment scheme with a %2.5 fee. Poolin is recognized for its transparency by offering excellent customer services and a telegram community which helps better connect the community services with miners. Poolin goes a step further and provides its users with a list of the profitability rank of every miner and also the hashrate, price, power consumption, and so on.
Mining new Bitcoins will inherently become more difficult and solutions like mining pools prove to be more relevant than ever. The reward method, reputation, fees, and security are among the most crucial criteria for choosing a mining pool and this list tries to encapsulate them as much as possible.
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