Size and market share
Mining pools in the crypto world, usually bigger is better. As explained earlier, big ones include more users. When their hash power is combined, the speed of deciphering a new block is even higher. This multiplies the chances someone from the participants to find the next block. That is good news for you. After all, each price is separated among all miners. To sum it up, join a bigger pool to have faster and repeated incomes.
Be careful though, the decentralization of the network is something worth paying attention to. Just as a reminder – mining is based on allocating processing power. This power is later used to solve algorithms. This way, the transactions are proven to be true and completed successfully.
When somebody attacks a certain coin’s network and hacks a pool with more than 51% market share, it basically overpowers the rest of the miners and controls the net-hash (short for network hash rate). This allows them to manipulate the speed of a new block is found and control the situation. They simply mine on their own as fast as they want, without being bothered. To prevent such invasion, also known as “51% attack”, no pool should have an overall market share of a certain cryptocurrency network. Play it safe and try to avoid such pools. I advise you to work on balancing and keeping the network of a coin decentralized.
Pool Fees
Till now, you probably already have acknowledged the huge role pools are playing and that all the hard work costs them money. They are used mainly for covering hardware, internet, and administration expenses. Here comes the fee in use. Pools keep a small percentage of each reward to pay these costs. These are usually around 1% and rarely up to 5%. Saving money from joining a pool with lower fees is not that much of an income rise, e.g. you will earn 99ct instead of 1 dollar.
There is an interesting perspective in that direction. If there are fixed costs, that each pool needs to cover, why there are some without a fee? This question has several answers. One of them is to be used as a promotion for a new pool and help to attract more users. Another way to look at it is decentralizing the network by joining such a pool. Moreover, mining without the fee will even slightly increase your possible income. Still, you can expect fees here after a while. After all, it can’t run for free forever.
Reward system
This is one of the main characteristics of each mining pool. A reward system can even tilt the scales of your choice. Mainly, there are several different ways to calculate the rewarding structure and decide how to split it between all the miners. Each of them in the pool, where a new block is found, will get a piece of the pie. The size of that piece will be based on the individually contributed hashing power. And no, it is not that simple. There are also numerous small details, differences, and additional commodities accompanying the whole process.
This part of mining might sound complex, but I would recommend you to look at it. Get familiar with all the terminology and approaches on the matter and you will be better prepared to understand the pros & cons of every reward systems.
Location
In the cryptocurrency world, speed is an important factor. The connection depends pretty much on the distance your rigs are from the pool’s provider (or server). In general, it is suggested to pick a pool relatively close to your location. The desired outcome is to have as low internet latency as possible. The distance I talk about is from your mining hardware to the pool. All this will result in a new-found block announcement done as early as possible. Your goal is to be the first one to inform the blockchain network about it.
It is just like in Formila1 or the Olympics, any millisecond matters! If 2 miners find a correct solution for the current block at the same time, the one that broadcasts the solution first will most likely get the reward. There are pools with high or low hash difficulty. This determines the speed with which each block is supposed to be mined. The shorter the block time of a coin is, the more these milliseconds matter. For example, when a bitcoin network has determined 10min for a block, you can more or less ignore optimizing the pool for the difference of 20ms.
Post time: Mar-28-2022