Whenever talking about Bitcoin mining, people think about hardware, software and wallets. However, there is also another thing that should be known: Bitcoin mining pools.
The Bitcoin Mining Pool
When we look at the theory of mining Bitcoin, everything is really simple. However, this is only the case when you have access to the very best hardware, software and wallets.
To put things as simple as possible, if you want to mine Bitcoins alone, everything is complicated. It is always a lot easier and even more profitable to mine in a group. The investment you need for group mining is also lower.
Mining alone means that you have access to limited hashpower. Mining pools step in to help with that.
As you join the Bitcoin mining pool, you work with other miners. Rewards are shared based on how much work you do. The miners are pooling resources and generate BTC blocks faster.
Cryptocurrency Mining Pools – Types
4 types of mining pools for cryptocurrencies can be mentioned:
- Single Coin Pools
Just as the name implies, you can only mine one coin. The Bitcoin mining pools are the most common but there are many single coin pools that are dedicated to other cryptocurrencies like ZCash or Ethereum.
- Multi Coin Pools
Miners can mine different coins, all at the same time, with zero efficiency lost. Many of the pools that fall under this category convert the cash that is mined to Bitcoin in the event that the miner wants to do this.
- Local Mining Pools
This is where the users set up hardware equipment. ASIC devices, the spent electricity and extra equipment are bought by users.
- Cloud Mining Pools
With these Bitcoin mining pools you do not buy equipment. You practically buy a contract. A fee is paid to mine. The BTC you get is what is mined minus the fee.
Cloud mining pools easily stand out as incredibly attractive but remember the fact that most of them are scams. You need to be really careful and you should only buy cloud mining contracts in the event that you are 100% sure that you will not be taken advantage of.
How To Choose A Bitcoin Mining Pool
If you want to choose the very best Bitcoin mining pool for you, it is important to consider the following factors:
- Pool Fee
Joining a Bitcoin mining pool usually means that you have to pay a fee. This is one of the most important things to consider as you make your final choice.
Usually, Bitcoin pool mining fee is 4% or under. The average one is actually 1%.
When most mining pools are launched, they ask for a 0% fee. This is quite lucrative but it is also a sign of a low security. There is simply a big possibility that you will end up being scammed. Something like this does not always happen but you have to know that the risk exists.
- Payment System
Every Bitcoin mining pool has a different system used for payment. This is why it is often confusing to compare them.
The payment system practically means what you are going to be paid. This is based on two factors: how much risk you assume and how much risk the pool assumes.
When it is the Bitcoin mining pool that assumes most of the risk, miners are paid monthly, even if the pool does not manage to solve a block while mining. Some returns are guaranteed. However, when this is the case, Bitcoin mining pool fees are higher. There are even some that charge 10%.
When users assume risks, many payment methods exist. Users generally get paid just as a block is mined by the pool. Due to this, payments are not as frequent. However, they are normally higher than when it is the mining pool that assumes most of the risk.
Besides the risk factor, there are Bitcoin mining pools that have minimum payout thresholds. This means you need to collect a specific amount before it can be transferred to a wallet you own.
Make sure that you always read payout rules before you choose a Bitcoin mining pool.
You have to know the cryptocurrency that you are going to mine.
There are mining pools that allow you to use merge mining. This means that you can mine different cryptos at the exact same time. Others just offer you the chance to mine one cryptocurrency.
This is a factor that is rarely considered but you should not make such a mistake. The Bitcoin mining pool that is not physically located in the country you live in or the continent you live in is not a great choice. Those that live in the US should find an America-based pool instead of an option offered from Europe or China.
- Reputation And Transparency
Always choose the Bitcoin mining pool that has been around for a long time. It is rarely a good idea to choose a new pool, unless you are highly confident that it is legit.
The reputable Bitcoin mining pools charge a little more but they are trustworthy. Up-time is also higher.
Transparency means that the pools offer enough statistics and data to show you that they are profitable. Also, you should look at the customer support system that is used. There is always a possibility you will need support.