Bitcoin Mining Pools: Full Guide
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Cryptocurrency mining is the process of verifying crypto transactions and adding them to the blockchain. With the increased usage of digital currency, crypto mining has grown both as an activity and as a topic. Even though mining generates some revenue for the miner, expenses hardware and electricity highly influence the income collected from digital currency mining. For this reason, miners are now opting to join a mining pool than going solo. A mining pool is a collection of crypto miners working jointly and combining their computational resources to mine currencies. These individuals share their hashing power and split the rewards based on the shares one contributes to the pool.
If you just got started with mining, joining a pool would be an excellent way to garner rewards within a short period and motivate yourself to stay involved.
What Is a Bitcoin Mining Pool?
Bitcoin mining pools are groups of miners who pool their resources together to mine Bitcoin. The miners are rewarded according to the hash rate each member releases to the Bitcoin pool to solve a block. Bitcoin is a hard cryptocurrency to mine which makes it practically impossible for solo miners to make any profit. The Bitcoin mining pools began when mining the coin became too difficult to a point where slow miners would take years to generate just a single block.
The main objective of mining Bitcoin in pools was to make the process of generating the blocks much quicker and get rewards consistently. A BTC pool manages the members’ hash rates and records the work performed by the contribution of each individual. This helps in assigning reward percentages to the miners based on the efforts contributed toward solving the block.
To understand how a Bitcoin pool works and how it makes mining easier, let’s consider a lottery game. Your chances of winning are much lower when playing alone than when you have teamed up with a group of people. By bringing in more guys into the game, you increase your odds but reduce the amount of the win, as youhave to split it amongst yourselves.
The same case applies to Bitcoin mining. By collaborating with other members of a pool, you work towards a common goal and split the block reward in relation to the percentage of the hashing power each one of you contributes to the pool. This is different from lone mining as your chances of being rewarded are significantly low when you go solo.
What is the difference between Mining Pools and Cloud Mining?
Mining pools are groups of miners who come together to solve blocks using shared resources over a network. The pool measures the amount of processing power each individual contributes to the process. These statistics are used to reward the pool members once a block is solved.
Cloud mining, on the other hand, utilizes a remote miner to obtain cryptocurrencies. Here you pay for hash power from an organization that owns the mining resources in exchange for part of the mining revenue received when running the miners. The payout is made daily based on the amount of hash rate you have and the current level of difficulty in solving the blocks.
Cloud mining is appropriate for users who don’t want to use their own machines or in places where electricity cost is too high. To get started, all you need to do is get a cloud mining service provider and pay for the hash rate that best fits your investments.
What to check before joining a Bitcoin Mining Pool
When looking for a Bitcoin mining pool, it is only fair that you find one that provides optimal payouts for all your time, energy, and resources. Joining the right pool could grow your earnings to a great extent and even give you the motivation to keep mining. Here are 5 things to look out for before joining a Bitcoin mining pool:
Pool fee is the amount charged by the pool whenever a new block is generated. The fees vary depending on the party that assumes the risk. If the pool operator assumes the risks, then the charges tend to be higher but if the risk is assumed by the miners the charges are lower.
Most Bitcoin pool fees usually range between 0% and 5%. Those pools with no fee are mostly new in the game and they can be the best bitcoin pools to join if you are just getting started. However, you should keep your eyes open as fees might change once the operators are done luring customers to the pool.
Different pools provide different payout options for their users. For instance, there are those where rewards are sent automatically to the users’ wallets and those that give users an option to transfer funds to their wallets only when they feel necessary.
While some pools allow users to withdraw funds immediately after a block is released, there are others where a block has to be confirmed 100 times before users are allowed to withdraw their funds. It is important to know how a pool releases payments before becoming a member.
While at it, you should also consider the pool’s payout threshold. A BTC pool with a high payment threshold should be avoided at all costs especially if you are running a low-end hardware device. Since your computation output is less, it will be taking you longer than necessary to hit the payout threshold, which will result to lower earnings.
When it comes to choosing a pool for Bitcoin mining, one needs to select an option that enjoys the best reputation in the industry. Join online groups and forums to see what other people got to say about any pool in regards to consistency of service, up-time, responsibility for payments, and pool fees. Joining such groups gets you firsthand information from people who have actually mined in the pool in question to help you make an informed decision.
A good reputation is a sign of a pool’s stability in both its payments and the platform itself. By mining in such a BTC pool, you become a member of a loyal community whose main agenda is to grow and continuously improve the pool. You are also guaranteed of secure payments and stable income.
Statistically, the size of the pool doesn’t really matter because eventually, miners in small pools will have mined the same amount of coins as those in larger pools within a specific duration of time. So what’s the catch? The waiting time!
The bigger the pool the lesser the time you will need to wait to get your rewards. Larger pools have a higher computing power, which means there is a higher possibility of solving blocks regularly. Sure, the smaller pools may take longer to hit a block but quite often, the long waits are followed by lucky periods where blocks are found sooner.
At the end of the day, for individuals, both pools will have the same success rates. If you want a steady income with regular but low payout scheme, a larger mining pool might be the right choice for you. However, if you want higher payouts released after a longer period, you may go for a smaller pool.
Privately held or not?
Most private pools are run by a single operator or a small group of individuals. In most cases, such pools are not too large and allow access to specific groups of people.
The reason why private mining pools may not be a good option is that they are hard to maintain. If there occurs a problem on the network, the operator may take ages to fix it as in most cases they are operating alone.
Best Bitcoin Mining Pools
Before we get down to the best Bitcoin mining pools, it is worth noting that most mining pools are located in China. This is because electricity cost in this country is very low, which has made it easier for Chinese miners to access an enormous amount of Bitcoin’s hashing power.
Rumor has it that some power companies in china even direct their excess energy to Bitcoin miners. As we speak the most prominent Bitcoin mining pools like AntPool, F2Pool, BW and BTCC reside in China and contribute about 60% of Bitcoin’s hashing energy. This means that the country mines 60% of the Bitcoins mined globally.
Even though China dominates this market, there are other countries that contribute significantly to Bitcoin mining. For instance, Georgia’s BitFury mines around 15% of the total Bitcoins, Sweden’s KnCMiner contributes about 7.5% of Bitcoins and California’s 21 Inc. mines around 3% of the same.
These countries contribute around 80% of the Bitcoins mined globally. The remaining 20% is produced by smaller mining pools located in different parts of the world including the Czech Republic and the US, which are home to Slush and Eligius respectively. With that out of the way, let’s now have a look at some of the best Bitcoin pools in the market today;
Antpool is a public bitcoin pool located in China and owned by Bitmain Technologies. The mining pool released its first block in 2014 and since then it has spread its nodes across the globe to ensure stability. Currently, Antpool produces around 25% of all Bitcoins globally.
According to Antpool, miners are not charged to use the pool but it doesn’t disclose how much one is charged for BTC transactions. However, the pool releases 12.5 Bitcoin reward, which is shared among its members once a block is found.
Antpool has ensured the safety of transactions for its users. Nevertheless, its latest move to raise Bitcoin transaction fees was not welcomed too well by its users and many find the pool unwise to use for now.
BTC.top is yet another Bitcoin mining pool from China. Founded by a Chinese investor Jian Gorom, the company started its operations in 2016 as a private mining pool. As of now, the pool only allows Chinese miners and there are no reports whether the project team will be opening access for the rest of the world.
BTC.top contributes about 11.2% of the total Bitcoins. And since its conception, its remuneration has seesawed between 12.5% and 14 %, which is divided among pool members weekly. The poolcharges 5% maintenance fee. BTC.top is safe to use and has been true to its users. However many feel that it should allow multi-national access in order to add more credibility to its services.
BTC.com is a mining pool that was developed by Blocktrail in 2016. It was later acquired by Bitmain, the developer of Antpool.
It is a public pool and releases 10.2% of the total Bitcoins. BTC.com charges a fee of 1.5% on transactions, information that it shares with its users. Payouts are sent in less than two hours depending on the Bitcoin network congestion.
The platform employs a powerful security infrastructure to make sure that your investment is safe. The fact that its transaction fee information is available to the public adds more credibility and trust to its processes as users can see exactly what is happening under the hood.
Bixin is a Chinese-based cryptocurrency mining pool owned by Bit Star Technology. The company started its operations in 2014 as a crypto wallet service provider but later got its own pool in 2015. Bixin is a reliable, safe, and stable platform to pool Bitcoin and is open to the public.
The pool contributes 8.1% of total blocks but doesn’t disclose how much it charges for transactions. However, Bixin states that their rates are competitive. It uses the PPS model to award its users whereby rewards are distributed based on the miners’ hash rates.
BTCC is a public Chinese mining pool that accounts for 7% of the total Bitcoins. Created in 2014, the site provides users with a platform where they can keep track of their hash power as well as that of the pool.
The pool charges 2% on transactions and rewards its members with 12.5 BTC. BTCC shares all its information with its users including its fee structure. Since its conception, the pool has always provided goods payouts, which has built it a reputation of being among the best paying pools.
Launched in 2013, this is another popular mining pool among the Chinese. F2Pool is public and allows users to mine Bitcoin, Ethereum, Litecoin, and Zcash. The pool charges 4% transaction fee and rewards users through the PPS system.
F2Pool operates on HTTPS protocol to ensure the security of funds. Being one of the largest mining pools globally, the site contributes 5.4% of Bitcoin. By allowing multi-coin mining, F2Pool has been a go-to option for many crypto miners.
ViaBTC is a China based company that was launched in 2017. The pool releases 5% of the total Bitcoin count. Apart from BTC, users can also mine Bitcoin Cash and Litecoin. ViaBTC operates on PPLNS 2% fee and PPS 4% fee modes of payment.
The site provides an intuitive user interface where miners can monitor their hashing power and view real-time market statistics of the currencies mined in the pool. The pool is safe to use and allows users to perform merge mining.
BWPool is also located in China and contributes 5% of the total Bitcoins mined globally. As a public pool, the site allows users to mine Ethereum and Litecoin in addition to Bitcoin.
The average transaction fee is at 1% and the company ensures transparency by sharing this information with users. BWPool utilizes SOLO, PPS, and PPLNS methods of payment.
Bitclub.network has been in existence for three years. Basically, it is a community of entrepreneurs who have come together to make money and leverage Bitcoin and other digital currencies.
Slush is a public pool that was launched in 2010 and was the very first pool to be created. It serves the Bitcoin market with around 3% of the total blocks.
The site has a fixed transaction fee of 2% and payments are made once a miner hits 0.0002 BTC threshold. Slush uses two-factor authentication to enhance security.
Located in Georgia, Bitfury releases about 2% of Bitcoins. It is a private pool that works towards making Bitcoin decentralized.
The site charges nothing for its transactions. All processes are secured with a robust infrastructure to ensure the safety of funds.
In a Nutshell
It is clear that the crypto market is flooded with BTC mining pools providing different services and different rewards to users. While mining solo might seem like a great option, as you don’t want to split the rewards with anyone, the chances that you will even get rewarded are quite slim.
Joining a pool is a wise thing to do, because even though the remuneration is low you would always have a viable flow of income. And if you live in a country where electricity cost is not too high like China, you will have a lot of options to sample both in public and private mining pools. The Chinese control more than 60% of the total Bitcoin hashing power. The reason behind this is quite obvious – the country enjoys cheap electricity, which allows Chinese pools to outdo their foreign competitors.
We also have to keep in mind that most of the digital coins mining equipment is manufactured in china, which makes acquiring it a cheap and easy process.
But what does China’s mining dominance mean for BTC? Having one country have that much control over Bitcoin mining exposes the network to political uncertainty. If the Chinese government decides to “shut down” Bitcoin mining pools today, the currency’s ecosystem could come tumbling down.
We hope this article has been informative. Visit our website and learn more about Bitcoin mining and mining pools in general.