The oldest currency in the world is physical gold, which is dug out from the earth via the process of gold mining. This activity unearths physical gold, which is not available yet. The mining company, or the individual digger, will own the gold if they are able to mine successfully. Cryptocurrency mining is not very different, as it is possible to use computer programs for discovering virtual coins digitally.
There are two functions of cryptocurrency mining; releasing new crypto in the system, which is similar to discovering gold, and adding and verifying transactions to the public ledger called blockchain to avoid double-spending. An internet-connected computer is used for this purpose, which is equipped with special mining software and hardware programs for managing and controlling the mining process. The computation process that’s involved in crypto mining is a puzzle-solving-like and calculation-intensive computation process, which requires high electricity consumption and high processing power.
Solving the puzzle allows the miner to add the next block on the blockchain and they receive the rewards. The rewards are given in the form of newly released coins, or fees related to the transactions that are performed on the block. Moreover, the crypto mining process has been configured in such a manner that if a greater number of miners are working, this increases the difficulty level. The difficulty level goes down if the number of miners also declines. Mining is considered a lucrative activity due to the rewards. With a greater number of miners trying to get a piece of the pie, it can get computationally more difficult to find new blocks and this requires more computing power. This is often too expensive and impractical for individual miners.
Enter cryptocurrency mining pools, where a group or collection of miners work together for increasing their chances of finding a block. These pools involve combining the computational resources of individual miners with that of the other members, thereby giving a boost to the joint processing power. This can help in achieving the desired output faster. Thus, you don’t have to have the top mining equipment to start cryptocurrency mining. You can simply join a pool in order to get started. These days, there are a number of crypto mining pools that can be found. So, how do you choose one?
Here are some of the things you need to consider when selecting a cryptocurrency mining pool for maximizing your earnings:
Select the Right Currency
First things first, you need to choose the right cryptocurrency for mining. There are some cryptocurrencies that are a lot more profitable to mine, whereas others will generate fewer returns for the same hash power. Even if you opt for the best pool for specific crypto, you will not earn much if it is not very profitable to mine. It is not an established rule, but in most cases, the established and old currencies are less profitable to mine when you don’t have very powerful equipment. You can find a number of online calculators that can help you decide which cryptocurrency should be chosen for dedicating your hash power.
There are some pool owners that are scams and you do not want to choose a pool that steals from your earnings or doesn’t pay you at all. Therefore, you should first make a list of pools for the cryptocurrency you are interested in and then do your due diligence to find out the pools’ reputation. You need to check online reviews and discussions about the pools. However, this doesn’t mean that you blindly trust the reviews because they can be faked as well. It is understood that if a particular pool has a lot of negative comments and complaints, it is best to disregard it altogether.
Size is Important
Along with reputation, one of the most important things you need to consider when selecting a cryptocurrency mining pool is its size. The rule of thumb here is the bigger the pool, the better it is. The size of the cryptocurrency mining pool depends on two factors; the number of crypto miners connected and the pool hash rate. Small cryptocurrency mining pools that only have a limited number of miners and a low hash rate will not be a lot more profitable than sole mining.
In contrast, the problem with large cryptocurrency mining pools is that the difficulty level is high, which means that those who do not have very powerful equipment will not be able to join. Therefore, you need to find a balance between the power of the equipment and the size of the pool. As there are hundreds of crypto mining pools dedicated to a particular currency, it is not that difficult to find a pool that’s large enough for supporting your low-end equipment.
The History and Payment Rules
When you are looking at the different cryptocurrency mining pools, you shouldn’t forget that the payment threshold is also an important factor to consider. If the pool has a high minimum payment, it would not be feasible for small miners because it would take them months to reach it. In addition, these payment thresholds can also depend on the currency as well. Some of these have low transaction fees, so the threshold is lower.
It is also a good idea to check out the pool fee, but most of them don’t charge more than 1% to 2% if any. Hence, it is considered a negligible factor when you have to make a decision about a crypto mining pool.
Needless to say, it is not necessary for you to stick with just one crypto mining pool and you can give several pools a try to find the one that works best. However, you should bear in mind that splitting amongst several pools means reaching payout will take longer and you will also end up paying more for transactions. This is not an issue with cryptocurrencies that have low transaction fees and payment limits but could be a problem for others that have high transaction costs.