The process used for verifying transactions and adding them to the blockchain ledger is known as cryptocurrency mining. As this process is complex and also computing power and time-intensive in some crypto ecosystems, miners are usually rewarded for their efforts in the form of tokens of the crypto in question. There is no doubt that this is a very lucrative opportunity, but there are a number of complexities involved. For instance, if the computing power dedicated to bitcoin mining goes up, the mining difficulty level also increases.
Plus, hundreds or even thousands of dollars are also needed to buy a specialized and expensive mining rig and you need to factor in the electricity cost. Therefore, it may not be a very profitable opportunity for individual miners and this is where mining pools come in. Essentially, a group of miners comes together to combine their resources and then make a joint effort to mine the crypto through their increased computing power. The chances of earning rewards are higher with a mining pool, even if it has to be shared amongst the pool members. How do you choose a crypto mining pool? Here are some things to consider:
Since there are hundreds of mining devices that exist in the market and with new ones being introduced regularly, you need to ensure that your equipment is compatible with the requirement of the mining pool. Likewise, a mining pool may not support all or some mining software packages and you may have to get a specific software for the pool. There are also mining pools that require you to have a minimum network connection speed. Before you look at anything else, it is best to see if there are compatibility issues to avoid any hassle later on.
Task assignment mechanism
Different methodologies are used by mining pools for assigning tasks to miners. The pool’s pooling algorithm needs to be efficient for distributing the mining tasks. For instance, if there are strong miners and weak miners, it should be able to assign the more difficult tasks to the former and easier ones to the latter. This can result in a balanced flow of hash data, which allows for the hash rate’s correct measurements. When you have to choose a pool, you should ensure that there is uniformity in how tasks are assigned, as the mining power of your device shouldn’t be factored into this decision.
Pool transparency by the operator
The mining pool operator has obligations that need to be performed fairly for ensuring complete trustworthiness and transparency amongst the members of the pool. Different measures are implemented by mining pools for ensuring this transparency, such as introducing a real-time dashboard view to all participants. You should look for a mining pool that can offer such data transparency.
Payout threshold and frequency
If your hardware devices are on the low-end, it is best to avoid mining pools with higher thresholds for payments. As you will have less computational output, it would mean lower earnings, which means you will have to wait longer for reaching the threshold to receive your payment. This is also applicable to the mining pool’s payment frequency.
Pool robustness and stability
Before you join a pool, you also need to do an assessment of their security in order to make the right choice. Does the pool have an open connection or a secure one? Are DDoS attacks a possibility? These have become very common in regard to pool activity, so you have to take it into account. You should also ensure that the mining pool you select can withstand an attack, if it does get hacked.
Pool fee structure
There are mining pools that charge a small fee from participants for using the resources, while you will also find those that have no fees whatsoever. But, you should pay attention to the mathematical formula and fee structure of the payout, which can and does include some other charges. There are some mining pools that may charge zero fee for a limited time and then become chargeable in the future. Likewise, others may have a fixed cost or a separate cost charged frequently. Some may also ask participants to host and operate the software on their own device, which could be costly.