Looking to cash in on the crypto craze by becoming a Bitcoin miner? Then read on for essential information you need to know. In this guide, we’ll cover the basics of mining, then dive into detail about the 10 best Bitcoin mining pools of 2018, breaking down the pros and cons of each.
- 0.1 What Is a Mining Pool?
- 0.2 How Mining Works in a Pool
- 0.3 How Do I Get Paid?
- 0.4 Why Should I Join Mining Pools?
- 0.5 Mining Pools vs Cloud Mining
- 0.6 10 Best Bitcoin Mining Pools of 2018
- 1 Conclusion
The past year has seen exponential growth for the cryptocurrency markets in general, and Bitcoin more specifically. Bitcoin started off in January of 2017 just below $1,000 only to end up edging nearly $20,000 at the close of the year; that’s some pretty impressive growth!
It’s clear that interest has been huge, and knowledge is becoming more widespread about the new technology. Unlike the earlier days of Bitcoin, it’s now common to hear commentators discuss price, adoption, and public perception of the big-name cryptocurrency on major outlets like Bloomberg, CNN, Fox Business, and more.
So, you’ve learned a bit about the world’s largest cryptocurrency, Bitcoin, and now you’d like to help out on the network. In fact, you’re not only going to help validate transactions for the network, but you’re going to be contributing to the blockchain and then getting rewarded for doing it!
Miners get paid in block rewards for validating transactions and are the ones maintaining the open ledger and keeping the entire network afloat. While it is a noble pursuit and will help keep Bitcoin viable, there’s also a little something in it for you: block rewards which are paid out in Bitcoins!
While it’s still early enough to get in on mining Bitcoin, the only problem is that it’s getting more difficult by the day, so what do you do?
Well, keep reading and we’ll walk you through what exactly a pool is, what it does, why miners use them, and some for you to check out this year in 2018.
What Is a Mining Pool?
First things first: What is a mining pool? Chances are that you’ve done some research about mining in the crypto world if you’re interested in getting into the mining game yourself.
If you have, then you’ve likely heard that as time continues, and more coins are mined, the difficulty for mining new Bitcoins becomes more difficult. Because of that increase in difficulty, it has grown significantly harder for just one person to mine Bitcoin on their own. That’s where mining pools come in.
A mining pool is just a collection of miners all coming together to “pool” (combine) their resources together and split the rewards. Pools allow for those who aren’t running multi-million dollar setups to still be able to compete and earn block rewards.
A good way to think about it is using the analogy of a group of friends buying lottery tickets: Your chances of winning the lottery are pretty slim, there’s no doubt there. So, what do you do? Well, one option is to grab a group of friends and have everyone put in money to purchase tickets.
In this example, the limited resource is money since you personally (likely) don’t have $5,000 to drop on lottery tickets. However, when you combine the money of a large group of people, that $5,000 becomes a lot less difficult to raise.
Should you win the lottery, the prize is then split up proportionally to how much each person contributed. For example, say you had one big spender in the group who put in $2,500 into the pool; they would collect 50% of the total prize money and the rest would be split proportionally for everyone else.
In the case of mining, we’re not collecting money together to go into a purchasing pool. Instead, the pool is collecting hashing power from all the participants to generate a new block and share the block reward of Bitcoins. It’s a great way for smaller miners to still get in on the mining game, even without the largest resources or operation.
How Mining Works in a Pool
Miners have a lot of different options when it comes to choosing a mining pool, but they all operate in essentially the same way. While there are some variations by payout, the core concept remains the same.
- Pool takes hashing ability from all participants
- Miners run pooling software instead of traditional Bitcoin client software
- Hashes are done for pool instead of Bitcoin network
- Pool records who does what work and how much they’ve contributed
- Pool “looks” for block rewards
- When a new block is generated, rewards are distributed among the pool relative to work put in
The ultimate goal is to coordinate all of the work contributed to go towards finding more block rewards with increased hashing power. Going off of the old adage of “power in numbers,” mining pools allow miners to mitigate the risk of not earning any block rewards for those with less than optimal mining rigs set up.
There are both advantages and disadvantages to the practice, but at the current difficulty of mining Bitcoin as a solo-miner, it’s typically a smarter financial decision than to attempt to mine on your own.
How Do I Get Paid?
Now you might be asking yourself “how do I get paid?” since you’re the one finding new blocks all on your own and things have to be split up among the miners in the pool. Remember how we talked about miners getting paid proportionally to how much work they put in?
Well that’s exactly what happens, but there are quite a few ways to make that happen. Below, we’ll break down the most common ways and explain how each one works.
Commonly abbreviated as PPS, or synthesized as pay-per-share, this way of profit sharing guarantees instant payout to miners in the pool depending on the number of “shares” solved by a miner. You can think of a “share” as proof that you’ve actually been mining with the pool.
In other words, a share is as a block solution that isn’t exactly good enough to be published on the blockchain as an actual block, but still difficult enough to find that it proves miners have been contributing to the pool. This payout model does bring on questions of the “block withholding” dilemma regarding individual miners in a pool looking to cheat the system, but that is extraordinarily rare and often isn’t worth the effort for most small miners anyway; many consider the risk to be minimal with the proper precautions.
Miners can exchange their collected shares for payment from the mining pool’s balance and receive funds instantly.
The proportional approach, or PROP, differs a little from the PPS model because instead of allowing mining pool members to cash in their shares at any given point, users are paid out block rewards when a new block is discovered.
As implied by the name, the amount individuals receive after finding a new block is dependent on the number of shares, or verifiable proof that they’ve been contributing to the pool each miner has. The more work you’ve put into the pool as a miner, the more of the block reward you will receive.
Another payout method which is typically abbreviated, the PPLNS approach is similar to the proportional method simply because it pays out to its pool miners based on the amount of effort put in and not luck, compared to some other styles of payout methods.
While similar, PPLNS differs from PROP by paying out rewards based on effort over an extended period of time (your time with the pool) and not just the effort you have put in for the current block. The idea here is to focus on rewarding miners who have been with the pool for a longer time and not those *pool-hopping, an unfortunate occurrence pools using the PROP method of payout can be left susceptible to.
*Pool-hopping is an old trick used to game the system and cheat mining pools into accepting more of a reward than was actually earned by a miner. To keep it simple, there are certain times when it is more advantageous to be mining in a pool than others. In the traditional proportional method, or PROP, miners were paid depending on their shares within the mining pool. However, the reward for each share paid out as a new block was found weighed shares differently as new shares were submitted to the pool. Those submitting shares earlier (sooner after the last block) ended up receiving, on average, a higher reward payout than those contributing later on.
Because of this, miners would often “hop” in and out of a set of pools (especially those using the PROP method for payouts) to submit shares as soon as they could for a new block and return later for collecting the block rewards after the work was done. This ended up leaving certain members of the mining pool doing more work with less of a reward and those cheating the system with a much higher payout than they deserved.
The SMPPS method is another model very similar to the PPS structure, but always ensures that payouts to the pool miners are never greater than what the Bitcoin mining pool has actually earned. For example, you don’t want to have individual miners collecting more returns on shares when the pool can’t sustain the payouts.
Also known as ESMPPS is another approach on the PPS method but differs significantly from the SMPPS. While it will never distribute payments larger than the balance of the pool, payments are always equally distributed among the miners in the pool.
CPPSRB is all about being as financially responsible as possible for a mining pool. The method works in a way similar to other forms of MPPS, or maximum pay per shares, but will only ever use the recent income from finding blocks. This method allows pools to ensure they never over distribute funds to individual miners and will ultimately keep the pool from going bankrupt.
These are currently the most common payout methods miners are likely to run into, and really the only ones basic miners need to be familiar with, however, if you’re a bit of a geek and want to really dive in with some of the more complex payout methods, there are even more out there to choose from.
Many of the other options are hybrids of some earlier payout methods while some are entirely different. If you’re interested in checking out some of the other methods, they include things like the Double Geometric Method (DGM), the Bitcoin Pooled Mining (BPM), sometimes referred to as “Slush’s pool,” Pay on Target (POT), SCORE, ELIGIUS, and Triplemining.
There are so many different options available out there! Make sure to find out what method your mining pool of choice is using before you sign up to contribute to the pool.
Why Should I Join Mining Pools?
As mentioned earlier, there is power in numbers. But exactly what does that mean? As time goes on and more people (i.e. miners) are contributing hashing power to the network, the amount of effort it takes to mine Bitcoin actually becomes more difficult.
This device was implemented with Bitcoin at its inception to ensure that we don’t accidentally mine all 21,000,000 Bitcoins (there will never be more than that, by the way) in the first couple years of existence!
After we mine all of the Bitcoins and bring them into circulation, there will be no more left to mine. There will be other options though for miners to make money, however, with transactions not going anywhere.
Right now there are just under 17 million Bitcoins in circulation, so there’s still plenty of time to find another 4 million Bitcoins! That’s not too bad, is it?
The way new Bitcoins come into circulation and are minted are distributed as block rewards for those mining on the network (that’s why you’re mining in the first place, right?). You might think that as more people get into Bitcoin mining, more coins are going to be found all the time. However, the system counters this by adjusting the difficulty level for generating new blocks as time goes on.
As more people mine Bitcoin and contribute to the network, the difficulty of the work required in the proof-of-work (PoW) algorithm increases too. Because the blockchain is maintained via PoW, there is no way to cheat the creation of a new block: work has to be done.
The current difficulty for PoW in generating a new block for Bitcoin is sitting right at around 2,874,674,234,416 hashes, or roughly 2.8Terahashes, nearing 2.9. If we take a look at the chart below, we can see that as the hashing increases on the network, the difficulty of the PoW increases as well.
While miners used to be able to generate new blocks on their own computer (think the early days of Bitcoin in 2009-2010), difficulty has made it almost impossible for solo miners at Bitcoin’s current state.
Hashrate on the Network
[Image & data courtesy Blockchain.info]
Difficulty of Finding a New Block
[Image & data courtesy Blockchain.info]
After taking a look at the increasing difficulty of mining Bitcoin, it’s unlikely that most individuals have the raw hashing power to even find a new block on their own; that’s why miners work together!
Mining Pools vs Cloud Mining
Another question many newcomers to the mining scene may be familiar with is “should I mine in a pool or pay for cloud mining?” Ultimately, this is going to come down to a personal decision between the two, but it is highly recommended that users stick to mining pools rather than paying for any type of cloud mining.
Cloud mining seems like a nice alternative that requires less capital and resources up front, but let’s take a look at the difference between the two below.
We’ve already covered what these are, so let’s just focus on the main points and distinction from cloud mining services. Mining pools are run by users who own hardware to mine and requires no additional costs up front to participate.
Mining pools take a cut of the block rewards as fees, but that’s not only to be expected as it helps maintain the pool and payment for mitigating risk as an individual. You’re eliminating the opportunity to find a new block all on your own, but you’re betting on the likelihood of pooled resources to be able to find them and pay out accordingly.
Cloud mining is an entirely separate industry and has some key differences. Unlike mining pools that require users to contribute hashing power to the pool, cloud mining is essentially paying for the right to use someone else’s computational power.
An easy way to think about cloud mining is like leasing a vehicle. When you’re leasing a vehicle, you aren’t actually paying to own the vehicle, you’re paying for the right to use it for a specified time.
Likewise, cloud mining services allow users to access hashing power in exchange for payment. After paying, customers can use the hashing power for mining whatever they’d like.
In the case of Bitcoin though, that likely means you’ll still be then using that effectively “leased” power to contribute to a pool.
The issue that arises with cloud mining is that while it is nice to not fork over thousands of dollars to build a mining rig, you’re paying an extra premium for the those that did build such a system. In the long run, users are paying for hashing power for Bitcoin while still accepting all of the financial risk.
After paying for a cloud mining service, there’s no guarantee that the value of Bitcoin will continue to rise. Then again, it’s also entirely possible that the price will surge in the coming year; there’s no way to tell.
Regardless, the fee is still going to be set for the right to use their hashing power, regardless of the price of Bitcoin. As a customer, you’re accepting all of the risk and paying for the right to do so. Tread carefully.
10 Best Bitcoin Mining Pools of 2018
So you’ve made the decision to start mining and have seen that the best course of action is to join a mining pool—great! There are so many different opportunities and pools to choose from, so let’s break down some of the best mining pool options in 2018.
Antpool is the single largest mining pool in the industry. No surprises here, the mining pool is based out of China and is run by the hardware company Bitmain. Bitmain is a large industry leader in their production of Application-Specific Integrated Circuit (ASIC) miners too.
You’ve probably heard of the “Antminer” before: that’s them. Being the largest pool in the industry, Antpool accounts for just under 18% of all blocks mined in the Bitcoin network.
On top of their size in the mining pool industry, Antpool also boasts of being the largest cloud mining service available for customers as well. Antpool offers both iOS and Android applications to run with their services. The current Antpool hashrate is measured at a whopping 3,429.34 Petahash per second, or PH/s. Wow, that’s a lot of hashing power.
Check out the official Antpool site here.
Another Chinese powerhouse, Discus Fish, also known as F2Pool, is next on the list. F2Pool is major stratum mining pool for Bitcoin, Litecoin, and a whole host of other altcoins.
The pool averages around 8,000 active users and services nearly half of all Chinese mining activity, in fact, F2Pool boasts more than 120,000 stratum connections globally.
The rewards system is based on the pay-per-share approach with a 4% fee and payouts are automatically set for users on a daily basis. The name for the pool dates back to 2013 before there was an English interface where it was characterized only by their coinbase signature 七彩神仙鱼 (Discus Fish), which was the nickname of one of the original operators.
Check out the official F2Pool site here.
Bitfury is an interesting mining pool for a few reasons. First, the pool itself is maintained by The Bitfury Group. The company actually doesn’t like to refer to itself as a “mining company” but rather as a technology group focusing on blockchain technology and who happens to have a strong interest in Bitcoin.
The second, and perhaps most important difference, between the Bitfury mining pool and others is that it is not a publicly available pool. The company produces its own mining hardware and runs a private pool not available for the everyday miner to join.
If you’re still interested in the impressive pool and would like to learn more about the team, you can visit the official Bitfury site here.
Next up on the list is yet another big name Chinese contender. BTCC is an impressively large pool with reports of mining nearly $900 million worth of Bitcoins in 2017 alone.
BTCC is another interesting case because besides being a mining pool, the project also hosts a Bitcoin exchange and wallets for users as well.
Nowadays, BTCC also offers mining for Litecoin, though Bitcoin remains the main focus. Like many other pools, the BTCC pool pays out it’s miners using the pay-per-share method, with an average 4% fee. BTCC allows users the opportunity to mine, store, and trade Bitcoin, all on the same platform.
Check out the official BTCC site here.
If you’re active in the Bitcoin space, this one may come as a bit of a surprise for some. ViaBTC is back! After a temporary suspension of services in early January of 2018, the large mining pool is back in business and open for mining. Besides Bitcoin, ViaBTC also supports mining for Litecoin (LTC), BitcoinCash (BCH), Ethereum (ETH), Zcash (ZEC), and Dash (DASH).
Mining in the ViaBTC pool also supports the “Bitcoin Unlimited” version which supports larger block limits. Miners in the pool can choose how they’d like to receive with a choice between pay-per-share (PPS) or the pay-per-last-N-shares (PPLNS).
Check out the official ViaBTC site here.
BW Pool, another Chinese Bitcoin mining pool, currently accounts for mining nearly 8% of all blocks. While large in size, BW Pool leaves a lot of room for mystery, especially for those miners in the United States.
Despite its size, BW Pool has little to no support in English and very little traction in the English-speaking parts of the world. The only real public statements the pool has made was endorsing a view of wanting larger block sizes for the network. Not a whole lot is known about this pool.
Check out the official BW Pool site here.
While not nearly as old as some of the other pools, BTC.com is definitely one of the most well-known options out there for miners. The brand owns the domains for Bitcoin.com as well as BTC.com and started a mining pool only 2 years ago in 2016.
Miners likely had already known the brand from their popular and powerful Bitcoin wallet and blockchain explorer previously released.
Coming close to the power of Antpool, the largest pool in existence, BTC.com accounts for more than 20% of global hashpower. BTC.com uses its own method for paying out rewards to miners in the pool.
The system the pool uses is called full-pay-per-share (FPPS), which accounts for an average transaction fee within a given timeframe and then distributes it across the network of miners like a regular PPS model.
Check out the official BTC.com site here.
Slush is the oldest active mining pool in the Bitcoin mining industry. Previous known as “Bitcoin Pooled Mining Server,” Slush is a staple in the pooled mining community since 2010.
The mining pool is now run by SatoshiLabs and, perhaps most surprisingly, unlike the vast majority of the larger mining pools, Slush is not based out of China.
The Slush mining pool is actually based out of the Czech Republic with additional Slush Pool servers located in the United States, Singapore, and China. Slush has an excellent reputation as a mining pool and is incredibly user friendly for those still getting introduced to the mining industry. Along with Bitcoin, Slush also offers the ability for users to mine for Zcash (ZEC).
Check out the official Slush site here.
It should be noted that before discussing this specific mining pool, the Bitclub Network is not available to citizens of the United States or US territories. If you’re a miner in the US, Guam, Puerto Rico, American Samoa, or American minor islands, then this is not the mining network for you.
This next option is a bit more controversial in the crypto community, so ultimately the choice is going to have to be made by individual miners. Bitclub is a bit of a hybrid mining pool where, on top of earning for mining Bitcoin, miners also get paid for recruiting new users to bring into the network.
Bitclub doesn’t disclose who the initial founders were other than a “group of programmers” who teamed up with some marketing experts to found the organization. Bitclub is similar to other mining pools in the fact that users combine computing power to look for new blocks.
However, where Bitclub differs is in its multi-level-marketing (MLM) structure for getting new users. MLM systems often have a negative association, especially after recent events with Bitconnect and DavorCoin; however, this doesn’t necessarily mean that the company is not trustworthy, but it does mean miners should do an appropriate amount of due diligence before acting.
To learn more about the referral and commission program, as well as the Bitclub Network, you can check out the official site here.
GBMiners is another mining pool not based in China but in India. As one of the world’s fastest growing mining pools, GB Miners focuses on returns for those investing in the mining pool. GBMiners is a product of Amaze Mining and Blockchain Research, LLC.
For those interested in either mining with, or investing in, GBMiners, you’ll need to create a free account first. To learn more about the program and decide for yourself, you can check out some reviews and the official site here.
Now that you’ve taken a look at all of the reasons for joining a pool, it should be pretty apparent that it’s really your best option as a miner. With the current difficulty level for mining Bitcoin being what it is, not only is it not profitable to mine for Bitcoin on your own in the short term, there are actually no guarantees that you’ll ever find a new block at all as a solo miner.
That means your next steps are to assemble the hardware required, if you haven’t already, and start building a rig. You’ll have a few different options in this area as well.
You can construct your own mining rig from a motherboard, power supply, RAM, and as many graphics processing units (GPUs) as you can get your hands on, or you can purchase a pre-built rig from various resellers. Alternatively, you can get into mining with ASIC miners too.
Regardless of what you decide on, make sure to adequately research your options to ensure that you’re choosing the right hardware to fulfill your mining needs.
After you’re ready to rock and roll, you’ll need to choose which of the main mining pools is right for you. You’ll need to consider all kinds of different factors.
If you’re a native English-speaker, it’s important to remember that many of the larger mining pools are based in China. Those mining pools differ depending on the platform in regard to whether or not they have an English interface available for international miners joining the pool.
On top of that, you should consider the payout structure of the pool. Are you looking to stick with one pool for a long time and build up a working reputation within that one pool?
Or maybe you want to consider the possibility of mining cryptocurrencies other than Bitcoin (known as alternative coins, often referred to as “altcoins,” with Ethereum and Litecoin being arguably the two most well-known) in the future?
If you are planning on expanding your mining adventures into other cryptocurrencies that can be mined, consider choosing a mining pool that offers multiple types of cryptocurrency mining opportunities. If that doesn’t sound like something you’d like to do, then it makes sense to choose a mining pool that focuses strictly on Bitcoin core mining (note: note Bitcoin Cash or “BCH”).
At the end of the day, there is no one “silver bullet” for telling someone what mining pool to join. The final decision will have to come down to you as the miner, and analyzing your priorities, goals, resources available, and what is a realistic outcome for your rig.