What is a pool in cryptocurrency mining

A few years ago, it was possible to mine digital coins even on a home computer. With the growing popularity of virtual currencies, the requirements for mining have increased. For example, Bitcoin is mined only on asics, Ethereum – on video cards. In 2023, only owners of large farms can mine bitcoin solo. Experts have calculated: to make a profit from mining coins, you need to have from 0.05% of the total hash rate of the network. Therefore, users, as a rule, combine capacities to work together. In the article we will tell you what is a pool in mining. In the summer of 2022, the largest platforms (Foundry Digital, Antpool) own 37.69% of the global Bitcoin hashrate.

What is a mining pool

Buying powerful coin mining equipment alone does not guarantee monthly profits. Along with the popularity of digital currencies, the complexity of blockchains is increasing. In July 2022, this indicator for Bitcoin is 209.33 Eh/s, for Ethereum – 871.21 TH/s.

Due to the increase in the number of miners, competition is growing. Properly organized coin mining remains a profitable business even with the decrease in profits and the growth of operating costs (electricity, hosting rent). A mining pool is needed so that users can receive stable payments even with a small hash rate. The service divides the task between participants in proportion to the connected capacity.

Miners send their part of the solution (orb) to the pool and are entitled to a share of the reward.

Why are they created

The time to find a new block is a constant for every blockchain. In Bitcoin, it occurs every 10 minutes. The hash rate required to find a block is determined by the complexity of the network. This parameter is constantly growing in popular coins. Competition between miners also reduces the probability of a solution.

To increase the profitability of the business, the owners of computing equipment pool capacity. Pools distribute the reward for a block taking into account the share of participation. This way, users can receive stable payouts. According to Blockchain.com, in July 2022, miners earn $22.44 million per day.

1

ByBit

5020 $
bonus for new users!

9.8

VISIT Read Review

ByBit provides convenient and safe conditions for cryptocurrency trading, offers low commissions, high level of liquidity and modern tools for market analysis. It supports spot and leveraged trading, and helps beginners and professional traders with an intuitive interface and tutorials.

2

Binance

Earn a 100 $ bonus

for new users!

9.5

VISIT Read Review

The largest crypto exchange where you can quickly and safely start your journey in the world of cryptocurrencies. The platform offers hundreds of popular assets, low commissions and advanced tools for trading and investing. Easy registration, high speed of transactions and reliable protection of funds make Binance a great choice for traders of any level!

Principle of work

Servers divide tasks into simpler ones and distribute them among participants (F2Pool, AntPool). The organization of miners’ work is performed by the program. If necessary, a coordinator can intervene in the algorithm.

The process of collective mining looks like this:

1. The pool receives a task.
2. The algorithm divides it into smaller ones and sends it to miners.
3. Users solve their parts of the task. The result (orbs) are sent to the system.
4. The server checks if the solution is a valid hash.
5. If the orb satisfies the requirements, the system commits to mining a new block.
6. The server distributes rewards according to the approved method.

Reward allocation systems

Pools distribute payment for validating transactions and generating blocks to participants. The rewards for a valid hash include:

• Cryptocurrency created. Coins are distributed among the miners. From this money, the platforms retain interest for services.
• Transaction fees. Some pools (F2Pool) write them off in their favor completely.

Pay-Per-Share (PPS)

In 2023, most mining platforms pay miners for each accepted fragment of the solution (shara) regardless of block formation. The services assume additional risks (hash search may take longer), so they charge higher commissions.

The price of a balloon is not a constant value. The algorithm calculates it based on the complexity of the network, the power of the pool in mining, and the time of block formation. The Pay-Per-Share (PPS) method is used by such platforms:

Pay-Per-Last-N-Shares (PPLNS)

This is another popular method of distributing rewards. Unlike the PPS method, there is no fixed payment for the submitted solution. Participants receive cryptocurrency only after the platform finds a valid hash. The service pays for each ball accepted during the solution of the problem. At the same time, a reduction factor for beginners is applied.

The longer a participant works on the platform, the higher his income. This is how platforms reward loyal customers.

In the summer of 2022, Pay-Per-Last-N-Shares will be in operation:

• Antpool
• Ethermine
• Multipool

Multipool features

Most services are focused on mining a specific coin. To change the cryptocurrency, the participant must reconfigure the program. For beginners, this is difficult. Inexperienced miners are better to start working with multipools (NiceHash, ViaBTC). Such services have peculiarities:

• Automatic switching to the most profitable coin. There is no need to reconfigure the .bat file.
• To work, you need to download mining programs for all supported cryptocurrencies.
• The reward is paid only in BTC. Users can independently exchange coins for promising altcoins.
• High pool commissions in mining. NiceHash takes 2.5% of the income, ViaBTC – 4%.
• To withdraw money to the wallet, the user independently creates a transaction and pays the network commission.

Top 10 large mining pools

According to Mining Pool Stats, in the summer of 2022, it is possible to mine cryptocurrency on more than 600 platforms. Participants choose a project according to their needs. The main parameters are the available coins and the capacity of the site. Experienced miners recommend connecting to services from the top 3 for the selected cryptocurrency. The table shows the largest platforms for mining popular coins in July 2022.

F2Pool

The platform was founded in 2013 in China. F2pool also has servers in Europe, USA. In the summer of 2022, customers can mine 11 coins including:

Registration in the project is not required. To start mining, you just need to download the mining program and make changes to the .bat file. F2pool is suitable for experienced users with powerful equipment. The administration gives 90 days to withdraw the reward. The service writes off the unclaimed coins for the specified time in its favor.

The minimum amount to issue is 0.0005 BTC. Miners do not pay the network commission for withdrawing Bitcoin. These costs are borne by F2Pool.

BTC.com.

The large Chinese pool is owned by mining equipment manufacturer Bitmain. The platform gives participants a block reward and transaction fees. BTC.com only charges a service fee of 2.5%.

In the project it is profitable to work at the extremes of the market during a strong load on the blockchain. Taking into account the high network commissions, miners earn 10-20% more. Along with top coins, users can mine promising altcoins:

ViaBTC

This Chinese platform works stably in Russia thanks to low ping (68 μs). With strong signal delays, part of the balloon may not reach the server. The service’s technical support responds to users via email and chat 24 hours a day.

ViaBTC is a multipool, switching between assets is automatic.

Users can set up lists of mined koins. In the summer of 2022, 11 cryptocurrencies are available, including:

MinerGate

The service is equally convenient for beginners and experienced miners. MinerGate offers a large number of settings for comfortable work. The developers have placed instructions for working with the service on the tab with answers to common questions.

In MinerGate you can mine several cryptocurrencies simultaneously without degrading the speed of mining the main asset. The web interface is translated into 19 languages, including Russian.

In the summer of 2022, customers can mint the following koins:

• Bitcoin
• Ethereum
• Monero
• Bytecoin and others

Miners can automatically select the most profitable coin for the last 60 minutes (Smart Mining function). You don’t have to download the program to work in MinerGate. You can mine virtual currencies through a browser, but the mining performance is lower. MinerGate also offers a good referral program. Members can earn 70% of the platform’s profits.

Ethermine

One of the largest services for ETH mining concentrates 30.5% of the blockchain’s computing power. You can mine cryptocurrency in Ethermine without registration. Creating a personal account makes it easy to view statistics. At the same time, the system does not ask for personal data, so you can work completely anonymously. Ethermine servers are located in the United States, Europe, and Asia.

Rewards are distributed according to the PPLNS method. The pool charges a small commission of 1%. Coins can be withdrawn to Ethereum and Polygon wallets. The minimum charge is 0.005 ETH. For the withdrawal you need to pay the network commission, so miners tend to get earnings not more than 1-2 times a month. To save on fees, you can withdraw coins through the Polygon blockchain ($0.06 instead of $2.5 in Ethereum). To do this, you need to connect a MetaMask cryptocurrency wallet configured for the selected network.

Binance Pool

The platform for mining is launched by the eponymous exchange in 2020. In 2022, the hash rate of Binance Pool increased 16 times (c 1 to 16 TH/s). To start mining, you need to register an account on the exchange and pass verification.

There are no withdrawal limits in Binance Pool. Crypto coins are received immediately to the exchange account. Coins can be used for transactions, placed on deposit (in July 2022 the rate for BTC is 5% per year), as well as transferred to an external account.

You can withdraw from the exchange from 0.001 BTC in cryptocurrency, 500 rubles in fiat. It is worth considering that Binance charges an increased fee for an outgoing BTC transaction. In July 2022, the fee is $4.77.

EMCD

One of the largest mining services in Europe and the CIS supports 7 top assets:

The platform was created in 2018 by EMCD Tech. In 2021, the developers launched an app for iOS and Android. The service offers a low fixed commission (1.5%), daily withdrawal of awards. Registered users can view statistics in a smartphone and through the browser of a desktop computer. The support service works around the clock. Operators answer in Russian by e-mail and online chat.

NiceHash

This multicurrency platform is popular among newcomers to mining. The website interface is translated into Russian. On the “Help” page, users can familiarize themselves with detailed instructions.

To work with NiceHash, you only need to set up an account 1 time. In the future, you can quickly switch coins without changing the parameters. In the summer of 2022, users are mining 30 cryptocurrencies including:

• Zcash
• Bitcoin
• Monero
• Ethereum, etc.

The service charges a fee – 2.5% of the income. The reward is paid in BTC.

Slushpool

The oldest mining pool has been minting coins since 2010. The platform is managed by Satoshi Labs. The Slushpool website is translated into 6 languages, including Russian and English.

At first, the platform focused on Bitcoin mining. Later, the developers added Zcash. The service has a simple interface. For convenient statistics tracking, you can use mobile software for iOS and Android.

HiveOn

In 2023, this is one of the largest pools for Ethereum minting. HiveOn’s servers are located in Russia, Europe, North America, and Asia. Ethereum Classic mining is also available to users.

The platform distributes profits according to the PPS+ model. The payment system includes PPS-based block rewards and PPLNS-based transaction fees. This approach is especially beneficial for small mining farms

Income is transferred to the member’s internal account daily at the set time. Withdrawals can be made from 0.1 ETN or 1 ETC. There is no commission for sending cryptocurrency to external wallets.

How to choose a pool for mining

In 2023, minting virtual currencies in the solo is unprofitable even for owners of powerful equipment. Only new assets can be mined alone. To reach profitability, many users combine resources.

Most mining pools are focused on mining BTC. Some services are customized for promising altcoins. Multicurrency platforms are also popular. Miners choose a project taking into account the technical characteristics and their own needs.

Pool capacity

The earnings of participants depend on how often the platform finds a new block. Pools with a small hashrate cannot compete with large services.

In July 2022, 52% of the hashrate on the Bitcoin network belongs to the 3 largest platforms – Foundry Digital, Antpool, F2Pool.

Other services have a much lower probability of finding a block. Experts advise choosing projects from the top 10 in coin with a capacity of more than 5% of the aggregate.

Commissions

Mining pools divide the reward for a block between participants, taking into account the spent capacity. The service’s income is formed by commissions from user profits. Other things being equal, it is necessary to choose sites with minimal fees. The average value is 1-5%.

Frequency

Cryptocurrency is transferred to the internal balance of the participant. After accumulating a certain number of coins, the profit can be withdrawn to the wallet. Some pools do this automatically (Binance Pool). On others, users create the transaction themselves (NiceHash).

For the withdrawal of coins, a network fee must be paid (the amount depends on the blockchain). Some projects (for example, HiveOn) take these costs on themselves.

Payout size

Each platform has its own minimum threshold for withdrawing earned coins. The project should be chosen so that the accumulation of funds does not take more than a month. Some services (F2Pool) write off unclaimed assets in their favor.

Reviews of miners

Mining pools charge 1.5-3% of participants’ profits for their services. This is a fair fee for customer support and equipment maintenance. Some unscrupulous projects intentionally reduce the capacity of participants. This way they earn up to 20% of the miners’ income. To exclude a meeting with fraudsters, it is necessary to find reviews about the project on thematic forums:

• Cryptotalk
• MMGP and others

Comments should be treated critically. Some platforms order reviews to increase popularity. Gross factual errors or, on the contrary, clearly structured comments will tell about it.

Testing

To make the final choice of the platform, you need to test its work yourself. To do this, you need to:

1. Connect the equipment to the site.
2. Measure indicators (hashrate, profit) for 2-3 days.

To choose the best option, you will have to test several projects. To obtain correct results of the test, it is necessary to mine the same coin.

Connection to the pool

In the summer of 2022, all popular cryptocurrencies can be collectively mined. To start mining, you need to:

1. Choose a pool from the top 5 by coin.
2. Create an account (optional). On most sites it is not necessary. In the personal cabinet you can see the statistics of mining, collected in a table.
3. Download a program for mining. It is better to use utilities recommended by the platform.
4. Customize the .bat file. You will need to enter the storage address and computer ID.
5. Make sure that the server has detected the equipment.
6. Test the work of the platform.
7. Start mining.

Summary

Due to high competition and the ever-growing complexity of blockchains, solo mining of top cryptocurrencies (BTC, ETH) is unavailable for most users, even with powerful equipment. In the summer of 2022, you need to have from 0.05% of the aggregate hash rate of the network to make money. In Ethereum, this is 43 TH/s. Single miners cannot compete with industrial farms, so they join pools.

When working in a group, each participant receives a stable small income. This allows you to pay the cost of electricity and amortization of equipment.

Frequently Asked Questions

❓ What are multipools?

These are platforms that support multiple cryptocurrencies. Some monitor the complexity of networks and automatically switch participants to a more profitable coin.

⭐ Which BTC mining pools are popular in 2023?

The most in-demand platforms are those with high hash rates that have an advantage in finding blocks. In August 2022, these are Foundry Digital and Antpool. They own about 38% of Bitcoin’s global hashrate.

⏳ How often can I receive payouts?

A mining pool is an autonomous service that sets its own procedure for withdrawing profits. It is usually required to accumulate a minimum amount. In ViaBTC it is 0.001 Bitcoin, in Poolin it is 0.005 Bitcoin.

❕ How to connect to the site for mining coins?

You need to download the mining software and make changes to the .bat file. Registration on the site is not required, but in your personal cabinet you can monitor the results in a convenient tabular format.

💰 In what coins do services pay the reward?

Earnings are credited in the mined cryptocurrency. Multipools transfer only bitcoin.

🎁 How do platforms distribute the block reward?

In 2023, most services pay participants using Pay-Per-Share (PPS) and Pay-Per-Last-N-Shares (PPLNS) methods. In the first case, miners receive cryptocurrency for each part of the solution accepted. In the second, the reward is distributed only after the block is formed.

💵 What is the pool fee for cryptocurrency mining?

In the summer of 2022, services charge an average of 1.5% of user profits.

Is there a mistake in the text? Highlight it with your mouse and press Ctrl + Enter

Author: Saifedean Ammous, an expert in cryptocurrency economics.