Introduction

In the ever-evolving landscape of cryptocurrency, one concept stands out as a testament to collaborative effort and efficiency – mining pools. Cryptocurrency mining, particularly for well-established coins like Bitcoin, has become a complex and resource-intensive task. Mining pools offer a solution to individual miners looking to level the playing field and increase their chances of earning rewards. In this guide, we’ll delve into the definition, workings, methods, benefits, and potential drawbacks of mining pools.

What Is a Mining Pool?

At its core, a mining pool is a collective of cryptocurrency miners who combine their computational resources to enhance the likelihood of successfully mining a new block. Mining, the process of validating transactions and adding them to the blockchain, involves solving complex mathematical problems. This endeavour is time-consuming, energy-intensive, and requires powerful computers capable of handling massive calculations.

Individual miners face substantial challenges in terms of costs and competitiveness. Joining a mining pool emerges as the most cost-effective approach, as it significantly increases the odds of receiving rewards for contributing to the blockchain network.

How a Mining Pool Works

In a mining pool, participants contribute their processing power to collectively find a block. When the pool successfully mines a block, the associated reward is distributed among the participants based on their contributed processing power or shares. Various payout schemes govern the distribution, with popular methods including Pay-Per-Share (PPS), Full-Pay-Per-Share (FPPS), Pay-Per-Share-Plus (PPS+), and Pay-Per-Last-N-Shares (PPLNS).

Proportional mining pools and peer-to-peer mining pools represent common approaches. In proportional pools, miners receive rewards based on the number of shares they submitted for a successfully mined block. Peer-to-peer pools aim to prevent centralization, employing separate blockchains to ensure transparency and prevent cheating.

Mining Pool Methods

Not all mining pools operate the same way, and several protocols govern their functioning. Proportional mining pools and peer-to-peer mining pools are among the most prevalent. Proportional pools distribute rewards based on the number of shares contributed by miners, fostering a fair distribution mechanism. Peer-to-peer pools, on the other hand, prioritize decentralization, preventing central control and potential manipulation.

Payout Schemes

The payout schemes employed by mining pools play a crucial role in determining how rewards are distributed among participants. Common payout schemes include Pay-Per-Share (PPS), Full-Pay-Per-Share (FPPS), Pay-Per-Share-Plus (PPS+), and Pay-Per-Last-N-Shares (PPLNS). Each scheme has its unique calculation method, considering factors like the quality of shares provided and transaction fee rewards.

Benefits of a Mining Pool

Participating in a mining pool offers several advantages to individual miners. The collaborative approach significantly increases the likelihood of earning rewards, providing a more consistent income stream compared to solo mining. Additionally, mining pools require less hardware and electricity from each participant, making it more affordable for miners to cover associated costs and turn a profit.

Disadvantages of a Mining Pool

Despite the benefits, mining pools come with certain drawbacks. Participants relinquish some autonomy in the mining process, adhering to terms set by the pool. Additionally, rewards are divided among pool members, leading to a lower share of earnings for individual miners. For example, the centralization of mining pools, with a few dominant players in the Bitcoin mining process, raises concerns about the intended decentralized nature of cryptocurrencies.

Are Mining Pools Profitable?

The profitability of mining pools depends on various factors, including equipment costs, the chosen pool, payout methods, and individual work contributions. While solo mining grants complete ownership of rewards, the high competition and resource requirements often make it an unprofitable venture. Joining a mining pool enhances the chances of earning rewards, especially considering the increasing difficulty of mining and fierce competition in the crypto space.

For those seeking to mine cryptocurrency and maximize their chances of earning rewards, joining a mining pool is highly recommended. The competitive nature of mining makes it challenging for individual miners to keep up with the network’s hashing power. Mining pools provide a collaborative environment that levels the playing field, increasing the likelihood of success.

The Bottom Line

In the realm of cryptocurrency mining, mining pools have become essential for individual miners looking to remain competitive and profitable. The collaborative effort, shared resources, and increased chances of earning rewards make mining pools a practical choice. However, participants should carefully consider the payout schemes, potential drawbacks, and the overall structure of the chosen mining pool before diving into the world of collaborative mining. As the landscape continues to evolve, mining pools stand as a testament to the dynamic nature of the cryptocurrency ecosystem.

To explore the list of mining pools that support Scala, check here.

Have you ever thought about taking cryptocurrency mining to the next level? Are you concerned about electricity cost? This article unveils a method which will save you money by using retired industrial server equipment.

These servers take advantage of large core counts and high frequencies, while at the same time, keeping the power consumption low – perfect for mining.

Choosing an affordable CPU

The Xeon Series of processors used during the LGA 2011 architecture for servers in the early to mid 2010’s are currently everywhere, selling used on the market.

The reason that these processors are discarded for a good deal, is usually due to that fact that large businesses and server companies will buy their new equipment on warranty, and simply do not want the equipment anymore when the warranty runs out.

They will sell them in bulk on the resale market, where smaller re-sellers pick them up and let them go for dirt cheap on places like Ebay.

DYOR

It is important to do some of your own research of processor types, because unlike most Intel i-Series processors, each Xeon processor is very different,
having massive disparities in things like cache size, core count, power rating, pin count, and frequencies.

Motherboard, Ram, Power Supply and Hard drive

Generally, parts are cheaper when you buy them separately and put them together your self, sometimes though the latter can be the case.

When it comes to the used server market, many companies selling their equipment have whole sale, and let things go together for a very good deal, due to the already low demand for the product.

Buying parts separately

If you decide to put the server together yourself; using only individually bought used parts; your options might be significantly greater. There is a surplus of used server parts to chose from.

Remember to always be aware of compatibility while building your mining server!

Halfway through!

By this point we’re already halfway through the build, and so far have spent around 400 $USD for an entire mining server with 24 cores and 3.0 GHz!

Solar Panels

The idea behind the solar mining concept is to push as many mining rigs as you can during the day, focusing as much energy as possible on to the mining servers; while you have it available.

Solar systems can run at night, however the cost for storing energy is significantly greater than the cost of making it, so expect paying at least double the total price of the system; for the battery alone; to store the extra energy.

Solar panels have a life span of roughly 25 years, so when looking at used panels try to find panels closer to the 5–10 year mark, or less.

They also do not always produce exactly the amount that they are rated for, therefore it is a general rule of thumb to double the solar power output for the required server amount.

Also be sure to remember and find a sunny place in your yard or on your roof, so that the panels can get adequate sunlight for energy production.

Why do we need a battery?

The reason that we need a battery is because a computer server system requires a constant flow of stable energy to operate; if a cloud happens to go over the panels, or a bird sits on top, it can cause discrepancies.

Solar power is collected by the battery as DC power, after which a power inverter is used to convert the energy back in to AC for the computer system.

Topically the AC/DC inverter sells new for as cheap as $30 on ebay; Keep the inverter as close to the battery as possible, and the entire system should be in a safe, non-flammable environment.

Remember to always be cautious while working around live wires, solar energy is powerful and can cause severe electric shock!

The battery and the charging controller

A battery can be the most expensive investment for the project, depending on the type, amount, and intensity of the charge.

Charging controller

You don’t want to destroy anything, so make sure to include a charging controller which will connect between the solar panels and battery, to prevent overcharging/voltage issues.

Battery types

The ideal type of battery to get for using and storing solar energy are deep cycle. Deep cycle batteries are built to handle a constant flow of energy from both the solar panels, and the servers load.

There are many different makes and models, although two commonly used types of deep cycle batteries are Lead Acid and Lithium Iron phosphate. Choosing which one works best for you should in part depend on how much power your system requires to operate.

How much power is your system using?

Generally if you are not storing energy for night use, you can get away with buying a small battery with the minimum power requirements. Otherwise, an equation can help you to determine how much power your systems will use:

The energy E in kilowatt-hours (kWh) is equal to the power P in watts (W), times the time period t in hours (hr) divided by 1000:

E(kWh) = P(W) × t(hr) / 1000

You can also use a calculator: Kilowatt watt Calculator

Conclusion

By this point, you should have everything required to build the solar powered mining system.

Total costs

• 2x E5–2670 V3 CPUs: 260$
• DELL POPEREDGE R630 Server: $130
• 2x Solar panels: $280
• Battery: $150
• Power Inverter: 30$
• Solar Battery Charger Controller: 20$
• Extra: 50$

In total, all the listed parts in this article total $920!

Now you can enjoy solar powered mining devices, without the headache energy bill at the end of each month!

A note on mobile mining devices

Mobile devices have a more energy-efficient CPU architecture and enable you to build even cheaper solar powered mining devices.

You can get all the latest news about the mobile miner beta on our Twitter and Discord channels.

Disclaimer: This article was made only for publicizing the author’s personal concepts and ideas. Nothing in this article is made for, nor making any official financial or system building advice.