Ethereum Mining Pools

Probably you have had the itchy feeling to start earning a passive income ever since you came across the cryptocurrency world. Perhaps, either short- or long-term trading is not your thing, but still you want to get your hands on profiting from the booming cryptocurrency technology.

Wander no more, in this article we will briefly explain what mining is as well as discuss the necessity of mining pools in the recent years and the years yet to come. Later, we will outline the advantages and disadvantages of mining pools compared to solo mining. Also, we will not skip explaining the different reward types in mining pools, so when you familiarize yourself with the entire process of starting your own mining career, you would know what payment type is most suitable to you. Lastly, we will introduce you to the most popular and reliable Ethereum mining pools out there.

What is a Mining Pool?

Essentially, a mining pool is a system that gather all miners together of a respective mining network and combines their mining power, which is used to earn cryptocurrency coins through the process called ‘mining’. The purpose of a mining pool is to solve the mathematical puzzles quicker with the help of the collective computational power of all the miners in the network. This system allows everyone in the pool to receive a small portion of the reward. You may think why you would prefer to receive smaller returns while being part of a mining pool, when you could mine by yourself and reap bigger revenue. The answer is profit frequency and stability. While solo mining, you are rewarded a portion of the respective coins only if your rig comes first at the computational puzzle – which means that you are most likely going to see a positive inflow of funds in your wallet once in a blue moon. However, if you make use of the numerous mining pools out there, you will receive less money but more frequently, which might prove more profitable in the long run.

The Necessity of Mining Pools

In the early days of the cryptocurrency, it was considerably less resourceful for the casual miners to get rewards. However, the nature of any cryptocurrency is its fixed amount of coins that can be mined as well as the increasing difficulty depending on the miners involved in the process. Therefore, mining becomes more demanding regarding the power of the mining rigs and the energy consumption, thus it becomes less profitable, if not unprofitable at all, to be a solo miner. For that reason, developers invented mining pools, where casual cryptocurrency miners can still benefit from their personal computers or dedicated mining rigs, which otherwise would prove ineffective. As mining by yourself would generate very infrequent income, ranging from once or twice a day to once in a month or two, depending on your hardware installation, mining pools ensure that every miner is paid regularly, which is the preferred income inflow of most of the users.

The first mining pool was invented in December 2010, just two years after Satoshi Nakamoto published the blockchain technology.

Pros and Cons of Joining a Mining Pool

While being part of a mining pool boasts many advantages, it also has its downsides. In this paragraph, a comparison between pool mining and solo mining will be drawn.

Advantages

The design of a mining pool aims to address the irregularity of the income, or in other words the time intervals between two successful creations of new blocks. While solo mining, depending on your computational power and the hash rate of your mining rig, theoretically, you are going to mine a certain amount of coins in a month. However, such calculations are just guidelines, which means that you might earn twice the anticipated amount in a week, or with some bad luck earn less than calculated in over a year. Thus, mining pools provide steadier income for its users.

The mining pools are designed for people, who are incapable of investing a lot in advanced mining rigs. Therefore, mining pools are serving the purpose to bring profit to the casual miners. For that reason, being part of a mining pool noticeably reduces the costs of operating a mining rig.

Due to the fact that mining pool provides more stable flow of income, it might prove more profitable in the long run, as solo mining brings profits in erratic intervals.

Furthermore, the maintenance of the pooling network is not your responsibility, which if mining on your own might be troublesome for non-programmers to deal with.

Disadvantages

Since a mining pool network is somewhat centralized, thus operated and maintained by a group of developers, it can be a victim of cyberattacks, if cyberterrorists consider the effort and risk of attacking the mining pool, you are currently taking part of, worthwhile. Also, as any other system operated by humans, it can experience a downtime when it is not operating due to an issue in the network. While the network is inactive, your mining rig will also be out of work, thus it will not generate any income.

Because the nature of the mining pools is to make use of the collective computational power of the mining users, the block rewards are distributed equally to the contributors. Although the reward distribution seems fair at first, it is still dependent on the contribution of each user to forging the new block. In other words, the more advanced mining rig, the bigger the returns. All in all, the rewards given in a mining pool are significantly less than solo mining.

To be part of a mining pool, you must join already developed ones, which charge an additional percentage of your earnings. These additional fees range from 1% to 3% for the big names out there.

Types of Ethereum Mining Pool Rewards

When it comes down to the types of mining pool payments, there are currently over 15 payment methods, but we will discuss in-depth only the two most common ones – ‘Pay-Per-Share’ (PPS) and ‘Pay-Per-Last-N-Shares’ (PPLNS).

‘Pay-Per-Share’ is a method, which instantly pays a flat amount to the miner for each share of the entire block solved. A basic but better explanation would be to think of a lottery, where if the miner owns 1 lottery ticket out of the total 10 purchased, he will have a 10% share of the lottery reward. However, this system always pays your share, even if the mining pool does not successfully forge a new block. What this method aims to achieve is to eliminate the ‘luck’ and variance in miner’s payouts. In this sense, the reward of the miner is offered instantly out of the mining pool’s balance of the cryptocurrency.

The other most common payment method is called ‘Pay-Per-Last-N-Shares’. This method is basically the same as ‘pay-per-share’, but its only difference is that ‘luck’ is part of it and the pool pays you only if the collection of miners successfully forges a new block. When making use of PPLNS system, it gives you the chance to earn more frequently because the ‘luck’ factor is not excluded.

Other payments methods include ‘Full Pay-Per-Share’, which is a similar system to ‘Pay-Per-Share’ but it rewards not only the block reward, but also a portion of the transactional fees. This system provides bigger flow of income due to the additional rewards.

Factors of a Good Ethereum Mining Pool

If you are already planning to join hands with other minters in a mining pool so to get more frequent income, it is vital to consider several things before joining a certain mining pool network. There are 3 factors to keep in mind when selecting the an Ethereum mining pool.

Fees charged by the pool provider

In exchange of a faster mining and regular rewards, mining pool providers charge a fee on your income. The fees vary in percentage, depending on the various pool providers, but usually are in the range between 1% and 4%. Of course, there are exceptions – some new pools charging zero percent fees, while there are greedier provides charging more than 5%. It is important to stick to these providers charging anywhere between the most common 1% and 4% as they seem trustworthy.

Reputation of the pool

Reputation is undoubtedly the most important factor when considering a mining pool. It has happened numerous times that new and untrustworthy pools scam people into joining their network and later shut down and disappear untraceable, leaving the miners with nothing.

Payout Methods

As already mentioned, there are over 15 payment methods in existence, thus different pools have different payout policies. The first thing to consider is the frequency of payout – they differ from daily, weekly, monthly or when a block is forged. Another factor to consider is the minimum payout threshold set by the pool provider – some might require you to earn hefty amounts before being able to withdraw, something that might not appeal to you.

Ethereum Mining Pools

There are various factors to choose an Ethereum mining pool, depending on what you are mostly looking for. In this article, the top three will be discussed as well as other ones. While the first three mining pools are the most popular ones, they are also the most secured and reliable ones. However, if you feel you want to try the new names popping out in the cryptocurrency mining world, you should definitely check out the three at the end of this list.

Ethermine/Ethpool (24% hashrate)

Basically, they are two different pools operated by the same provider. Ethermine boasts the largest mining community with over 130 thousand users worldwide. It offers many server locations across the world, allowing everyone to hook their mining rig and start earning. The one security measurement they implemented to keep the server uptime as much as possible is advanced DDoS protection – a firewall for hackers. The pool provider pays instantly with a minimal threshold of 0.05 ETH, but it takes 1% of your income in return for the services it offers.

MiningPoolHub (7% hashrate)

MiningPoolHub is the second largest Ethereum pool in the world. It gained enormous popularity recently because users can mine other coins depending on the profitability of each one. Also, it charges a fee of 1%, which is the standard in the industry. It does support many locations around the world, allowing everyone to be part of their network. The difference between the largest and this mining pool regarding the minimum threshold is that MiningPoolHub allows you to withdraw at 0.1 ETH, slightly higher than Ethermine.

Nanopool (13% hashrate)

This mining pool has the reputation of the third largest one regarding popularity and community population of 85 thousand users. It has the same fee policy of 1% as the previous ones. The minimum payout threshold is 0.2 ETH, which might take you a bit more time to reach.

Dwarfpool (4% hashrate)

Dwarfpool also offers its customers to mine various other coins than Ethereum, but Ethereum remains its main crypto coin. It charges the same 1% as all the previously mentioned mining pools. However, due to its minimum threshold set at 1.01 ETH, it is targeting users with far more advanced mining rigs. For the casual miner, it might not be the best provider to start with.

Weipool

This mining pool provider stands out from the crowd because no registration is required to start mining on their network. But this is not all, the developers do not take a cut from your income but rely on donations made from its community instead. The only downside is the high minimum amount withdrawable is 1 ETH. Weipool has been gaining enormous popularity lately so do not miss to check it out.

CoinMine

CoinMine is a similar platform as Weipool, requiring no registration to be part of it. It is quite new network, but it is worth checking out because it charges as low as 1% but the minimum threshold is kept to the floor – 0.1 ETH, which is a preferable option for beginners.