With so many digital currencies being developed, it has become increasingly difficult and expensive to keep up with changing technology and mining equipment. In order to stay abreast of the current trends in mining, you have to keep on changing or updating your equipment which is a very expensive process. This is the reason why most individuals prefer mining pools instead. But before you decide to join one, here are 6 facts you should know about them.
1.Most Mining Pools are in China
Most mining pools are located in China. These pools include those that mine lucrative and most expensive cryptocurrency Bitcoin. Mining requires the use of a lot of energy hence high electricity costs. In China, the cost of electricity is low and thus, makes it plausible business-wise for the miners to concentrate their mining hardware in China. Even those that consume less energy such as the ethereum mining pool are all concentrated in the same country.
2.Mining Pools are Not the Same as Cloud Mining
Many people tend to confuse between the two a lot. In a mining pool, you are required to have your equipment and join the rest with similar equipment to create a single network in which you can pool your computer resources together and then share the rewards based on individual’s contribution. In cloud mining, you are not required to have any equipment. You identify a service provider and pay them to mine for you using their own tools. You buy contracts from which you earn some interest.
3.The Smaller the Pool the Better
Mining pool networks can comprise of many computer resources or just a few. The more the resources in one pool, the higher the likelihood of concentrating harmful hashing power and the less the rewards since you would be sharing with a large number of individuals. Smaller pools are better since you have more control and autonomy. Rewards are also better if you manage to get any coins.
4.Mining Pools Attract Some Fees
Mining pools are controlled by one super server. It is this server that pools the hashing power of all other resources in the network together to try and solve cryptographic problems to get rewards. Such servers must be maintained and such charge a certain percentage of the rewards earned. As a miner, it is your duty to carry out due diligence to identify the pool with favorable fees depending on your goals.
5.They Can Be Private or Public
Mining pools can either be privately or publicly owned. If you are new to this trade, you’d be safer with a public mining pool. This is not to say though that private mining pools are not suitable, but it is better to get some credible connections first before joining a private pool.
6.Rewards are Not Guaranteed
While joining a mining pool, have it in mind that rewards are not guaranteed. This is usually a game of chance where you can get or fail to get rewards. You can even make losses for that matter in various ways including mining a coin which then loses value when you are about to sell. So, when you get into this trade, be prepared for any eventuality negative or positive.