What are bitcoin mining pools?

What Are Bitcoin Mining Pools

Bitcoin Mining Pools

Over the course of time, bitcoin mining has become a real challenge. From easy mining with a CPU and later with a GPU and FPGA that offered faster data hashing, today’s bitcoin mining requires custom supercomputers and special hardware like ASICs.  As demands and difficulty of making a single blockchain grew, so did the industry for this specific activity. For these reasons, knowing why and how to join bitcoin mining pools became more and more relevant for those who want a stable income from mining.

Bitcoin mining pools and their miners

Bitcoin mining pools consist of miners who pull their processing power together with the goal of mining bitcoins more effectively. Miners in the pool willingly share block rewards in proportion to their contributed mining hash power. Every pool is different in size and offers various reward methods. If you’re encountering them for the first time or if you are just changing the pool, check out the bitcoin mining pool chart and bitcoin mining pool list for instant information about the pool’s characteristics. A bitcoin mining pool chart will show you current pools and their part in the network hash rate, while a bitcoin mining pool list provides you with more detailed information about the pools.

Chinese bitcoin mining pools control 80% of the network hash rate and China is the home country of most mining companies. The remaining hash power is spread across the rest of the world in countries like Iceland (5%), Japan and Czech Republic (3%) and Georgia and India (2%). The location of the pool does not matter so much because most of the pools have servers in every country.

Bitcoin mining pool fees and reward methods

Bigger pools offer more regular payments, but the payout is smaller because it is shared among a big number of members. Smaller pools offer less frequent, but larger payouts.

Bitcoin mining pools have different payout structures. When a miner finds a new block, they share the reward for that with other miners in their pool. Most pools concentrate on the number of shares which a miner has submitted to the pool as a proof of work, so the payment corresponds to the portion of the work that he/she has done, no matter if the blockchain has been successfully mined or not. This type of reward method is known as a Pay-per-share (PPS) and represents best payout model of bitcoin mining if your contribution is high. The other method is called Pay Per Last N Shares (PPLNS) in which the reward is distributed only when the whole problem is solved by the pool, i.e. when a blockchain has been mined. This method is for miners who mine as fast as possible.

Another important thing to take into consideration is bitcoin mining pool fees that vary depending on the method of payment distribution the mining pool is running and on the fact which party is assuming the risk – the miners or the mining pool operator. If the risk is on the mining pool operator, the fees will be higher, whereas the fees will be lower if the risk falls on the miners.

Bitcoin mining pool fees usually range from 0% to 4%. The standard fee for mining pools is usually 1%.

Basic methods of calculating rewards are PPLNS, PPS+ (4% fee + 2% TX fee) and/or PPS 103% on mining income rate.

Bitcoin Mining Hardware

Bitcoin Mining Hardware

Bitcoin mining pool software

Bitcoin mining pool free entrance makes joining them fast and easy. The biggest mining pools are Antpool, BTC.top and BTC.com. Antpool is based in China and holds 25.2% of the whole mining capacity. BTC.top is a private mining pool that posses 11.2% of the whole mining capacity, but it cannot be joined. BTC.com is the second biggest public pool with 10.2% of a complete network hash rate. Bixin mining pool owns 8.1% of the mining capacity, BTCC pool 7.3% and F2Pool 5.4% of the bitcoin mining network. From Europe comes Slushpool, another very interesting option.

Bitcoin Mining Pools Distribution

Bitcoin Mining Pools Distribution

The next thing to choose is your bitcoin mining pool software. With bitcoin mining pool free software, mining becomes fast and easy to start. Not all programs are free, though – some charge a symbolic price for downloading. Your software choice depends on whether you use Windows, Linux or MAC. The best software are CGminer and BTCminer. The latter is an open-source bitcoin miner, which automatically chooses the frequency containing the most valid hashes. It also supports FPGA boards containing a USB communication and programming interface. CGMiner is the best known used bitcoin mining pool software among miners. It can be used for either Windows or Linux. Many interesting features can be found here, such as remote interface capabilities, multi GPU support, CPU mining support and many others. Other more common used software are BFG miner, Diablominer, and Easyminer.

Joining a bitcoin mining pool

When you decide in which pool you’ll be swimming and downloaded your bitcoin mining software, let us show you how to join a bitcoin mining pool. First of all, create an account on the web page of your preferred pool. Once you have it, create a worker. You can create multiple workers for each piece of mining hardware you will use. Afterwards, set up your mining software to channel your hardware’s hash power. Your bitcoin wallet address should be entered next because through it you receive payment. After that, just choose your working name and that’s it – you are ready to mine!

There are many things to consider when deciding on whether to join mining pools or not. However, if you take a look athash rate distribution in the bitcoin network (which you should), joining a pool becomes much more attractive. Bitcoin mining pool free registration and being part of a mining pool group gives you an opportunity for a stable income and potentially lower cost of mining.

Miners can switch bitcoin mining pools free and easy by routing their hash power to a different pool, so the market share of pools is constantly changing. Keep in mind that constant change is a primary feature of the bitcoin market and always stay informed. The best way to do so is to visit our website regularly.

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Author: Ben Prescott
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