Solo mining for correct block hashes is incredibly difficult right now. Actually, solo mining has been very difficult for quite some time. Mining pools first started at the end of 2010, with a company called Slush Pool. They are still active and at the time of writing they hold 161 Ph/s of hashing power. This equals to about 6.5% from the total mining power placed at work around the world.
The total hashing power across the network is 2.83 Eh/s, which is quite a lot if you try to imagine it. Since somebody that would be mining solo would have to go
Since somebody that would be mining solo would have to go against these mining pools in a race for the correct hash, you can easily see how beneficial it can be for somebody to participate in a mining pool. Your miner would work side by side with other miners in the pool and collaborate together to find the correct nonce that will produce a viable proof of work hash.
These mining pools distribute work shares to your miners as they go through all the possibilities for reaching a proof of work hash and completing a block before the rest of the pools. Some mining pools also offer cloud mining plans or services, but usually restrict your miners to work for that exact pool or currency.
Payment plans
In order to ensure that miners would have a benefit from participating in the collective work, these pools utilize different plans through which they issue payments. Most of them are based on participation, since finding a proof of work hash requires some luck. We will take a look at the two most popular ways that miners receive their fees for mining as a part of a pool.
PPS – Pay Per Share
This is the most direct way of getting paid for the shares of work your miner does for the pool. This method uses a simple formula to figure out the average number of shares that are necessary to find a block and pays them to you on completion. Note that this is very risky for pool operators, so it’s highly likely that the pool will charge a small fee from the dividends it pays to you.
PPLNS – Pay Per Last N Share
This method is a round-based payment plan that pool operators use to incentivize loyal miners. Depending on the shares it takes to find a correct POW hash. Through the use of a formula which calculates the average number (N) of shares necessary to find a correct hash, this method pays off the miners for current and past rounds. If you’ve been participating in previous rounds you’re looking at a nice reward, even if the block is solved with a lower number of shares.
Comparison of Mining Pools
If you’re strongly considering buying some miners and signing them up with a mining pool, you could use a place where you can compare mining pools and the options they offer miners. You can learn more about the rest of the payment methods these organizations offer you here as well.
Mining pools are the go-to way for this period of Bitcoin Mining. There are some interesting solo mining options available, but most of the profits that miners make are through participation in a mining pool.
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