Despite Bitcoin first coming onto the scene in 2009, it can seem like people have only taken a real interest in it in the last few years. The reason for this is the relatively recent surge in Bitcoin’s value.
Back in 2009, Bitcoin was worth pennies, it hit a peak two years later in June 2011 of $32. As of today - October 28, 2021 - one Bitcoin is currently worth $61,316.50. The percentage increase is astronomical and more people than ever want to get a slice of the pie. Which means mining more coins.
New Bitcoins will enter circulation after the miners have managed to solve a complicated mathematical problem on the blockchain. The miner who first solves the problem adds a new block of crypto transactions to the digital ledger and updates its data.
While this is an oversimplified definition of mining, it does cover the overall idea. So, in order to mine Bitcoin and other cryptocurrencies, you must have the right mining hardware and tools. Or as it’s commonly called, a mining rig.
A rig will include items such as ASIC (Application Specific Integrated Circuit) miners, CPU (Central Processing Unit) miners, and/or a GPU (Graphics Processing Unit).
And guess what? All of these resources cost a lot to buy and operate. Mining Bitcoin has become so expensive that, usually, those who want to invest are now joining mining pools to combat the costs while still enjoying the rewards.
Keep reading to find out what a mining pool is and how you too, can join one.
What Is a Mining Pool?
A mining pool is a group of people who collectively agree to pool their resources and share the profits.
For example, have you ever split the cost of a bunch of lottery tickets with work colleagues or friends with the agreement that if one of the tickets wins you all share the prize? While you might have to share the prize, there is more chance of you winning in the first place. After all, it’s far better to share $1 million, than it is to keep 100% of nothing.
Well, a mining pool works in the same way. The group of miners will collectively use their resources to create more mining power. The more mining power you have, the higher the chance is that you will generate a block on the blockchain and therefore, receive the reward.
One of the best parts of joining a mining pool is that you don’t have to match other investors. The reward is divided relative to how much power each member contributed. This means you don’t have to be stinking rich or own a ton of resources in the first place. You simply take out proportional to what you put in.
You should also bear in mind that the mining pool will have an owner who will, rightfully, charge each member a fee for joining. The amount will vary from owner to owner, but it’s unlikely to ever be an unaffordable amount since the owner also benefits from having as many members as possible.
How to Choose a Mining Pool?
Like with any good investment or plan, you shouldn’t just choose the first pool you find. Unless you have already done enough research about it. However, since there are many mining pools to choose from, each of which will have different features, you might need a little help knowing which to choose. Or what you should be looking out for.
- Transaction Fees - As stated above, the fees will vary, you can pay up to 4% to join. Even at this higher rate, it’s not a bad price. Don’t waste too much time looking for 0% pools. They do exist but they won’t always be the best or most secure option.
- Security and Reliability - One of the best ways of checking to see if a mining pool is legit is to check out reviews from other users. Also carefully read the owner’s website. Scam sites can be spotted miles off. Even more legitimate-looking ones will have flaws or terrible online reviews. You don’t need to be overly paranoid about joining a mining pool but it is worth doing a little research first.
- Mining Pool Size - This one is down to personal preference. Large pools will generate rewards more frequently. But, you’ll receive less of the share. Smaller pools will give you a bigger share just more infrequently. If you have a preference for one over the other, then check out the size of the mining pool before you join so you can set your expectations.
- Policy for Payout - Each pool will have different payout policies. Like with the size, this comes more down to preference. Some will give daily payouts, others will only pay when the block is solved. Neither is better than the other, just different. You’ll likely have an idea already about which is best for you although many people are content with either option.
How Do Mining Pools Share the Rewards?
Sharing the rewards fairly and precisely within mining pools is incredibly important. However, calculating it all accurately can seem a little complicated at first. To ensure the results are always fair, and to prevent anyone from playing tricks on other miners, there are several methods used to make the calculations.
Before we dive into explaining the most common methods, let’s have a quick look at what is meant by the use of the term ‘share’ or ‘shares’ so you can fully understand each explanation.
Essentially, share(s) denotes how much computing power each miner is contributing to the pool. The higher the number of shares the more power they are contributing, and therefore, the lower the number of shares the less power the miner is contributing.
Below is a rundown of the various calculation methods used to keep everything fair and above board.
This method is used to provide BTC miners with guaranteed and fast payouts for every share they solve. This is possible because the shares paid out come from the balance of the mining pool that already exists.
The Pay-Per-Share method allows miners in the pool to withdraw their rewards immediately, something which many miners see as a huge advantage. Furthermore, with this method, the mining pool operator carries more of the risk than the miners.
The proportional method is fairly self-explanatory. The reward value that each miner gets is equivalent to the block reward divided by the total number of shares that all the miners collectively put in.
Pay Per Last N Shares (PPLN)
The Pay Per Last N Shares method is a method similar to the proportional method listed above. The main difference, however, is that instead of summing up the number of shares in a round, here only the last N shares are taken into consideration, disregarding the round length and difficulty.
Double Geometric Method (DGM)
With the double geometric method, pool operators can minimize some of the risks. For this, pool operators get part of the block reward on short rounds. However, they then return it on the longer rounds. This method is a great way for pool operators to normalize the reward payouts.
While it may seem overwhelming at first if you are new to mining pools, the ultimate thing to keep in mind is that all these methods are there to ensure you never receive less than you should. All of these methods, whichever one is used, keep your rewards fair and safe.
How to Join a Mining Pool?
Due to the idea of strength in numbers, Bitcoin mining pools will let users begin with any kind of mining hardware and equipment. Mining pools are there to be used by all types of players, from those who have limited hardware and resources, all the way up to those who have serious and powerful hardware. By working together, everyone benefits by gaining more.
The process of joining a BTC mining pool requires programming the mining software to direct its aims to a specific mining pool. You can join a BTC mining pool in five simple steps:
- You need to buy a suitable Bitcoin mining rig
- Choose the Bitcoin mining pool you want to join
- Find its stratum address (an address secured by a Stratum V2 protocol – the most popular mining protocol) and link it with your mining software
- Add the Bitcoin wallet address where you want to receive your reward
- Configure the mining software for the selected BTC mining pool
There is some final data you’ll need to finalize the whole process. However, this data will be secured by your chosen mining pool.
Will You Be Part of the Future of Bitcoin?
Since mining Bitcoin by yourself has become a near-impossible task, working as part of a team is the only way forward for the vast majority of people. Mining pools allow miners to not only generate more BTC on a more frequent basis. But they also allow those who wouldn’t normally have the opportunity to be part of something huge.
You can be a beginner with limited hardware, experience, and knowledge and still be part of the Bitcoin revolution. If you have been toying with the idea of mining Bitcoin or being part of a pool for a while, now is the time to act.
Millions of people around the world regret not taking Bitcoin more seriously ten years ago. Five years ago. Even one year ago. As Bitcoin reaches new heights in value over and over again, it’s never too late to jump in on the process and make yourself some serious gains for your future.
The best time to invest in Bitcoin was 12 years ago. The second best time to invest in Bitcoin is today.
Don’t sit by and watch BTC go from $60,000+ to $100,000+ and forever live with the regret that you didn’t act when you had the chance.
Now you know what a mining pool is, how they work, and how to join one, it’s time to go to work. You can get yourself set up today and change your life in a few easy steps.
For a long time, cryptocurrencies have been, and still are, the future. There is an opportunity for everyone willing to take it.
For a mining pool that you can trust, one that offers low rates, and is 100% safe and secure, use Mining Syndicate and become part of something great.
Act Now with Mining Syndicate
If you would like any more information about starting or expanding your Bitcoin horizon; reach out to us at Mining Syndicate. Our mission is simple: Strengthen the Bitcoin network by enabling small-scale miners to affordably purchase and reliably host miners.
As a small miner, Chris became frustrated by the lack of hosting options available for miners with under 100 units. As luck would have it, he found a 2.5MW mining facility for sale right down the road, and thus, Mining Syndicate was born. Facilities #2 and #3 are already in the works.
Why is Mining Syndicate so successful? Because we have a team of people who are just like you, eager to be a part of the future of mining. If you would like more information about how you can be a part of Mining Syndicate, how our facility works, or the products we sell, you can reach out to us:
We look forward to hearing from you and having you as part of our team - together we are stronger!