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Once you understand cryptocurrency mining and have decided to try it out, you may join a mining pool because you’re more likely to be rewarded for your work. However, choosing a mining pool can be challenging—there are many to choose from and several questions to answer.

Find out what you should look for in a mining pool and how to decide which one you should join.

Key Takeaways

  • You may need to buy specialized, expensive equipment to compete in a mining pool.
  • It’s important for mining pools to be fair in work assignments and transparent in their operations.
  • Payout and fee schemes are essential because they can eat into your profits.
  • The combined mining pool hashrate is more important than its size, but the size of the pool also helps you gauge its trustworthiness.

Choose Your Mining Pool Equipment

You’re able to mine cryptocurrency on a variety of devices if they are capable. Most mining applications require a graphics processing unit (GPU) or central processing unit (CPU). However, GPU and CPU mining is not as profitable as it used to be due to the increased time and energy consumption it takes to mine a coin.

It’s best to use a mining rig designed specifically for cryptocurrency mining called an application-specific integrated circuit (ASIC). You can also build multi-GPU computers specifically for mining, but these still have a much lower computational power than an ASIC.

There are several ASICs available for purchase from online retailers. When choosing an ASIC, it’s crucial to understand hashrate—or the rate at which the ASIC can perform the mining work. The higher the hashrate, the faster you’ll mine—but you’ll pay more upfront. The other consideration is energy consumption.

For instance, the Goldshell KD5 ASIC has a hashrate of 18 Th/s (terahashes per second) but has a price tag of nearly $65,000 and consumes about $200 worth of electricity per month on average. An older model, the Goldshell KD2 ASIC, has a hashrate of 6 Th/s and only consumes about $71 per month—it is priced around $27,000.

The older model is “cheaper,” but you’ll be hard pushed to keep up with miners who have the more powerful rigs.

You’ll also need to ensure you meet the minimum network connection speed to the pool server. Additionally, cooling the room your miner is in will raise your cooling bill significantly because it will generate heat.

Ensure the Mining Pool Is Transparent

The mining pool operator must perform fairly to ensure transparency and trustworthiness among the pool’s members. For instance, you should investigate whether the total hash rate declared at the pool level appears to be true. You should also look for signs that the pool operators use lower payout schemes—you want to ensure the mining is worth your time also.

If the mining pools you’re considering don’t have a real-time dashboard that brings transparency, you might consider another pool.

Review the Pool Payout Scheme

If you have low-end hardware mining devices, you should avoid pools with higher thresholds for making payments. You’ll have less computational output, which will lead to lower earnings.

Many pools use the pay-per-share (PPS) or the pay-per-last-n-shares (PPLNS) methods for their payment schemes. If the pool uses PPS, you receive a fixed amount per submitted share of work. Generally, you’re paid when your share is submitted.

PPLNS pays miners using a weighted system—the pool is paid when a block is mined, and a coin is rewarded to the pool. The number of shares you’ve submitted is divided by the total number of shares submitted by the pool, which is multiplied by the block reward—the cryptocurrency reward for creating a new block on the blockchain.

Other payout methods are full pay-per-share (FPPS), which adds transaction fees into the calculation; pay-per-last-n-groups (PPLNG). There are several others, but PPS and PPLNS are the most common.

Look for Mining Pool Stability

Another critical factor to consider before joining a pool is assessing its stability. Stability refers to whether the pool experiences any downtimes, which affect your mining ability and profits. Generally, you’ll need to find information about the pool’s history, such as:

  • Does the pool offer a secure connection like a VPN, or does it only use an open connection?
  • Is it vulnerable to DDoS attacks (common with increased pooling activity)?
  • Has the mining pool withstood and repelled any attacks?
  • Has the pool experienced any lengthy downtime?

Many pools have support pages in place where you can find discussions, tips, and announcements that can clue you into stability issues in the past.

You can search other internet sources for reports of pool downtimes, but they may not always be trustworthy. Cryptocurrency is still new enough that it is hard to find valid, reliable sources.

Review the Pool Fees

Nearly all pools require fees, but some are structured to operate without them. For example, the oldest mining pool still in operation is SlushPool—they charge a pool fee of 2% of your reward and a payout fee of 0.0001 Bitcoin on payouts under 0.01 Bitcoin. P2Pool is another of the oldest pools left—it has no fees, but its hashing power might be lower because it is strictly a peer-to-peer mining pool without a mining farm operating as the central miner.

Weigh the Mining Pool Size and Power

In a mining pool, the number of coins mined over a period is proportional to the pool’s computing power. In general, the more participants a pool has, the less time it takes to mine—pool size can equate to more or less computing time.

A small pool of the latest ASIC miners can outperform a large pool of older or slower equipment. The combined hashrate of the mining pool is what determines which pool performs better.

Larger pools have a higher probability of creating blocks due to their larger computing power, while smaller ones generally take longer. A mining pool’s size can also reflect its trustworthiness to some extent. For example, many active miners in a pool suggest that the pool and its management are trusted.

Choose Your Mining Pool

Once you’ve weighed the attribute of different mining pools, you should be reasonably comfortable picking out the one that works for you—and your budget. It’s important to note that you can join a mining pool armed only with your personal computer if it has a compatible GPU, but gains will be much slower. If you’re only looking for a few dollars a month to spend, GPU mining is an acceptable way to use equipment you already have for small rewards—and a mining pool can help you increase those rewards if you choose your pool carefully.

Can Anyone Join a Mining Pool?

Anyone that has the equipment and a desire to mine cryptocurrency can join a mining pool.

How Do I Join My Mining Pool?

Choose your pool based on your criteria and add the stratum address in your software. Then, connect your wallet, configure your client, and start mining.

Can I Mine Bitcoin Without Joining a Pool?

Yes, you can. However, joining a pool is a much more profitable way to mine Bitcoin, especially since its difficulty increases with every coin awarded. To be competitive, it’s best to join a pool unless you have the resources to create your own or buy multiple state-of-the-art ASIC miners.

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