In this review guide, we will discuss the intricacies of crypto mining pools, why you should join one, and factors to consider when searching for the right pool for your mining ventures. But first, let’s examine the fundamentals of cryptocurrency mining.
What Is Crypto Mining?
While introducing this review guide, we asserted that cryptocurrency mining is an activity critical to the security of decentralized blockchains. Hence, miners compete by solving complex arithmetic and find new blocks with computers for rewards in the form of new coins. While all this is going on, a majority of blockchains have preconfigured functions that increase the difficulty of the process of finding new blocks as more miners plug in their machines for the sake of mining new coins. In turn, this has steadily upped the competitiveness of mining activities. As a result, miners have moved to adopt more sophisticated and efficient mining rigs to improve their chances of finding blocks.
As such, it has become improbable for solo miners to run a profitable mining venture, especially if they can’t afford the latest mining rigs. In light of this apparent challenge, mining pools have emerged as the ideal solutions for small scale solo miners who are at a disadvantage.
What Are Crypto Mining Pools?
Mining pools are networks of miners who have agreed to contribute resources and computational power to optimize their chances of establishing a profitable mining venture. These entities offer opportunities for small scale miners to enhance their computational power to hash rates on par with large scale mining farms. With the features available on mining pools, you can expedite the rate at which you find blocks.
Once you join a mining pool, the pool assigns tasks to you, which when completed will contribute to the grand scheme of things. The ability of every member of a pool to complete assigned tasks in record time determines the efficacy of the pool. Therefore, some pools incentivize members by adopting a reward sharing formula that takes into account the volume of tasks and success rate of each participant.
How Do Joining A Mining Pool Compare to Solo Mining?
You might be wondering: What is the essence of joining a mining pool when I can invest in sophisticated mining rigs and mine solo? In its true sense, miners, especially in the case of well-equipped miners, can isolate their mining venture and keep all of the rewards earned from finding blocks. However, in reality, there are a lot of people vying for the same reward. And no matter how sophisticated your mining rig is, it is improbable for you to sustain a profitable mining venture.
On the other hand, joining a mining pool automatically increases the probability of completing tasks a lot quicker through the enhanced hash power of connected mining hardware. Hence, finding blocks regularly is more feasible. And while you may believe that sharing rewards with other members of the pool immensely reduces your profit, you should, however, consider that joining a mining pool guarantees steady earnings as opposed to solo mining profits that are few and far between.
How Do Mining Pools Work?
As mentioned earlier, a mining pool is a network of miners that also function as intermediaries between miners and blockchains. Therefore, the mining pool has to operate a full node and provide a server through which miners can access all of the information and resources they need to contribute to the pool. The mining pool distributes tasks among members and keeps tab of all activities as well as store them for accounting purposes. Once the pool finds a block, it announces it to the blockchain and its network. Note that each mining pool has a preferred model for sharing rewards as some might disburse earnings immediately, while others have predefined dates or payout thresholds determining when members are eligible to withdraw funds.
Do Mining Pools Charge Fees?
In most cases, mining pools charge 1-5% of rewards earned by successfully finding blocks to maintain the network and ensure that there are no downtimes. Also, recall that there are lots of accounting and statistics involved in running a viable mining pool, which you will agree takes time and processing power. The same applies to the task distribution processes expected of every mining pool. Nevertheless, some mining pools do not have transparent fee policies. This notion stems from the fact that a majority of pools fail to disclose the exact amount earned from fees imposed on each transaction entered into blocks.
Apart from rewards earned for finding blocks, successful miners have the liberty to charge fees on each transaction added to their newly found blocks. While this is a given, a majority of mining pools hide the details of this fund generating scheme from their members, which might cause miners to second guess the efficacy of the reward sharing policy of pools.
What Do I Need to Join A Mining Pool?
Joining a mining pool is straightforward. First, you must ensure that your rig or mining hardware conforms with the pool’s requirement. The same is true of mining software packages, which primarily connect your rigs to the mining pool. Once you register on the website and connect to the server, you can start accepting tasks and tracking the hash rate of the mining pool.
Having discussed the fundamentals of crypto mining pools, what then are the factors to look out for when choosing one?
What Are the Factors to Consider When Searching for The Best Crypto Mining Pool?
The Market Share and Size of The Mining Pool
The first thing to consider is the size of the pool. Although some believe that size doesn’t matter, there are, however, enough reasons to ensure that the pool you are considering represents a sizable market share of mineable crypto networks. From simple logic, you will agree that the more miners pool their hashing power, the faster it is to decipher new blocks. However, note that the decentralization of a cryptocurrency network depends on the distribution of its hash rate. In other words, decentralization is compromised when the hash rate is concentrated on a particular mining pool as the network becomes susceptible to a 51% attack. What this means is that, as a participant of the crypto network, the onus falls on you to choose your mining pool wisely and preserve the decentralization of crypto networks.
The Reward Distribution Policy of The Pool
This factor is integral to the viability of your mining venture. Recall that we mentioned earlier in this guide that some mining pools base their distribution policy on the contributions of each member. With this model, miners that have meaningful impacts will take a larger share of rewards. While this is a given, we suggest that you explore the specifics of the reward sharing formula and determine its efficacy. By doing so, you will ascertain that you are rightly compensated for the tasks undertaken.
Besides, it is advisable to take the time to verify the payout threshold of the pool. If your contribution is small and the platform’s payout threshold is high, then it might take a while before you can cash out. Nonetheless, the quality of your research on the reward policy of your chosen pool depends on the availability of a transparent system, which brings us to our next point.
The Transparency of The Mining Pool
It is easy for pool providers to obfuscate vital information that will help members gauge the viability of the mining network. For one, it is imperative to access details relating to the hash rate of the mining pool at all times. The top mining pools for cryptocurrencies provide dashboards that showcase real-time information regarding the performance of the pool. Also, pools incorporating transparency will not shy away from disclosing its sharing formula.
The Task Distribution Algorithm
One of the primary functions of a mining pool provider is the provision of task assessment and distribution mechanism. The quality of this algorithm has an integral effect on the pool’s output. For instance, mining pools ought to allocate difficult tasks to miners with more powerful mining rigs, while easier tasks are ideal for small miners. The inability of the mining pool to distribute tasks according to the capacity of miners’ rigs could derail the chances of consistently earning rewards.
The Compatibility of The Mining Pool
When registering on the platform, you will likely encounter some requirements for the seamless integration of your mining hardware to the pool’s server. Here, the pool might require that you utilize certain mining pool software packages or hardware for easy connection and efficient operations. Once you have established the viability of the mining pool and decided on joining it, you should ensure that it is compatible with the model of your mining hardware and software.
Also, while researching compatibility, it is imperative to consider the type of cryptocurrencies it supports. Ascertain that the cryptocurrencies it supports align with your chosen crypto networks. Therefore, if bitcoin is your preferred choice, ensure that you opt for the best mining pool for bitcoin. Likewise, the best altcoin mining pools are the ideal choices for miners opting for cryptocurrencies not named bitcoin.
The Mining Pool’s Stability and Robustness
Mining pools must provide the appropriate security for their networks. Joining an insecure mining pool might expose you to all sorts of risks. And so, you must carry out extensive research on the security status of the mining pool you are considering as well as its track records. We suggest that you avoid mining pools susceptible to DDoS attacks. As such, the pool must incorporate multi-layer encryptions and other security measures that will help it repel attacks commonly associated with pooling activities.
Another important factor is the availability of infrastructures to support the pooling endeavors of the platform. Recall that mining pools are typically networks. Thus, they ought to implement the right infrastructure to cater to traffic and prevent downtimes.
The Customer Support of The Mining Pool
As it is with all crypto service providers, it is imperative to explore the customer support system of the mining pool you are considering. Try as much as possible to avoid pools that cannot provide 24/7 customer services and good feedback mechanisms. It is preferable if the pool can offer customer support systems in your local language.
How Did Cryptolinks Compile Its List of The Best Cryptocurrency Mining Pools?
We at Cryptolinks have taken the time to research the crypto mining pool market and provide all of the information necessary to pick the best. Through our research, we have been able to identify pools that have proven their efficacy when assessed using the recommendations highlighted earlier in this guide. To achieve this, we implemented an organic methodology that examined the market share and size of the mining pools reviewed.
Thereafter, we reviewed the reward distribution policy and the payout threshold of each pool. The information gathered from this section helped us determine the fairness and transparency of the mining pools. Next, we assessed the task distribution algorithm of each and how effective it is when it comes to assigning the appropriate workload to each participant. After assessing the task allocation systems of the mining pools, we verified the requirements imposed on members, especially those that relate to the accepted mining software packages and hardware specifications. Note that our research featured methods that helped us identify the best bitcoin pools as well as their altcoin counterparts.
Likewise, we ascertained the robustness and safety of the mining pools. Here, we identified the security measures implemented on each platform and their efficacy when under attack. The reputation of each pool helped us determine their commitment towards protecting their members from hacks. Once we could conclude on the security status of each mining pool, we went ahead to explore their capacity to scale according to increasing demand on their networks. Lastly, we verified that each pool has quality customer support systems.
In the end, we found 7 websites that are worth mentioning on our crypto mining pool list. We suggest that you check out the separate reviews provided for each to ensure that you pick the one that best suits your mining venture.