Crypto mining is the essential cog in the machinery known as cryptocurrencies, allowing cryptocurrency holders to make transactions and ensure system sustainability. The process of mining cryptocurrencies is essential for two separate reasons:
It supports and verifies transactions made within the network to keep its decentralized character;
It rewards the most successful miners for their contribution to the overall process.
Bear in mind that not every miner gets the reward. If we’re talking about PoW mining, utilized by Bitcoin, for example, then only the fastest miner will be rewarded (currently with 12.5 BTC). The PoW protocol is pre-programmed to decrease rewards by half on set periods, which means that reward will reduce to 6.25 BTC in May 2020.
Mining protocols and mining difficulty are undisputedly major factors that could make or break your determination to get involved in this business. With more and more miners getting in on the action, the mining difficulty, among other things, significantly increases, requiring miners to invest in more advanced and expensive equipment.
What are Mining Pools?
Crypto mining pools have been introduced as a sustainable solution to this problem. Since not everyone could afford expensive miners, people join forces to mine specific coins jointly. Of course, they also share rewards.
There are numerous mining pools nowadays, but Josh from Bitcoinfy has presented a collection of the top options in the interesting infographic that is published below this text.
If you are interested in starting from scratch, you are better off learning a thing or two about mining pools before getting in on the action.
Types of Mining Pools
There are several different types you should consider before making your choice, and they mostly differ on the principles of splitting the payout. Overall, they tend to view the total as a collection of shares, with each type using a separate scheme during shares distribution:
Pay Per Share – Each share is given a specific value, and they are distributed among miners on three different principles – maximum, shared, or equalized shared.
Proportional – Here, shares are distributed between the miners based on the contribution each one has made to the mining process.
Score – Similarly to the proportional model, these mining pools distribute shares proportionally. The only difference is that they base it on the time the miner spent contributing to the pool rather than the actual computation power they contributed.
Pay Per Last N Shares – Here, the pool operator determines the value of the ‘last N’ shares, and the payout values are determined on its basis.
Mining Pools in 2019
Nowadays, most experts would recommend entering a mining pool if you are interested in this practice. Individual miners, even heavily equipped ones, don’t stand much chances against mining farms, so pick the suitable mining pool for your needs and get some crisp-fresh crypto coins straight away.