Once you’ve decided to become an Ethereum miner and have your hardware ready to go, the next big question you’re likely to consider is whether you should join an Ethereum mining pool.
A mining pool is a group of individual miners who work together to mine cryptocurrencies – in this case, Ether. There are lots of advantages to joining a mining pool, although it’s important to know the ins and outs before signing up.
Types of mining
There are three main ways individuals can mine cryptocurrencies like Ether:
- On your own: If you mine Ether on your own you receive all the rewards without having to pay anyone else or share the proceeds. However, it’s extremely difficult to successfully mine Ether by yourself because you’re competing with large mining pools and corporations who deploy masses of energy and computing power to find a block.
- Through a mining pool: By joining a mining pool, you can add your hash power to the combined hash power of the group, thereby increasing your chances of finding and verifying a block. The reward for finding a block is shared with all the miners in the group.
- Through cloud mining: Instead of owning hardware, you can rent time from existing miners. You avoid the initial set-up costs of buying hardware, but you have to pay a fee to the third-party miners.
Mining pool advantages
By combining your hash power with other miners in a mining pool, you can increase your chances of successfully mining a block together. In addition, a mining pool helps to lower the volatility of your payouts.
Rather than waiting for a large payout when you successfully mine your own block, you can collect a small part of the entire pool’s Ethereum rewards much more frequently. In other words, miners in a mining pool generate blocks more quickly, which produces a consistent and steady reward stream rather than irregular or one-off rewards.
Joining a mining pool also reduces some of the other downsides of mining alone – namely, high electricity costs, lack of space, lack of ventilation, loud noise, and heating issues.
Mining pool fees
The disadvantage of joining a mining pool is you have to pay fees. When you’re choosing a mining pool, it’s important to join one with low fees because the lower the fee, the higher your profit. You also need to make sure the fees are offset by the potential returns.
Choosing a mining pool
As well as looking at the mining pool’s fees and potential returns, it’s important to think about the server location of the pool. The closer your mining rig is to the server, the more efficiently it can mine.
It’s also a good idea to look at the minimum payout of the mining pool to ensure you won’t be waiting too long between payouts. Some other considerations include whether the pool has a robust user base, its functionality, and its trustworthiness.
Different mining pools have different reward schemes in place, such as “pay-per-share”, which pays instantaneous payouts according to each miner’s contribution, and “proportional”, which distributes rewards according to each miner’s shares at the end of a round.
Popular mining pools
The biggest and most well-known Ether mining pool is Ethermine. It has approximately 25% of the network’s hash rate and is used by more than 60,000 miners. Ethermine charges a single 1% fee for all received ETH rewards and offers both mobile and desktop versions. Ethermine supports Ethereum (ETH), Ethereum Classic (ETC), and Zcash (ZEC).
Other mining pools to consider include Nanopool, which has a community of around 40,000 Ether miners, Dwarfpool, which accounts for about 5% of the network’s hash rate, and Miningpoolhub.
The simple answer to whether it’s worth joining an Ethereum mining pool is yes. A mining pool offers you the best chances of mining Ether successfully, whereas if you opt for solo-mining, it could take years before you find one block.
A bigger decision is which mining pool to join, but opting for one of the popular names should stand you in good stead for a seamless Ether mining experience.