Bitcoin has been an excellent asset for investors and miners alike over the last decade. As a result of computing power enhancements and increased interest from larger organizations, the difficulty of Bitcoin mining for individuals and enthusiasts has steadily increased over time. As a result, individual miners have been squeezed out of the race to obtain block rewards from the Bitcoin blockchain.
Bitcoin mining pools provide a solution with user-friendly interfaces and provide innovative pay-out schemes. Mining pools have lowered the barrier to entry for Bitcoin miners. These services allow individual miners to combine resources and generate a higher hash rate to compete for blocks and earn Bitcoin mining rewards.
However, that doesn’t mean finding a top Bitcoin mining pool is an easy process. There have been numerous examples of Bitcoin mining pools abandoning users and stealing rewards, which highlights the necessity to complete thorough research before committing resources. In this guide, we will look at what equipment is required to participate, define what to look out for when choosing a pool, and how to get started.
How To Join A Bitcoin Mining Pool
After deciding to join a Bitcoin mining pool, the next step is to connect the mining hardware. Although each mining pool interface will be slightly different, the steps involved to join a BTC mining pool are similar.
- Create a BTC wallet address. Before starting to earn rewards from Bitcoin mining, you will need to create a bitcoin wallet address. This will be the address used to receive and store BTC. Remember to choose a wallet that will keep BTC rewards secure.
- Join a Bitcoin mining pool provider. Most Bitcoin mining pools such as Binance Pool will then need users to create an account via the official website. This will involve registering and connecting your BTC wallet address so that rewards can be distributed. You should be able to change the wallet address used for pay-outs at any time.
- Configure mining hardware. The final step when connecting requires you to configure your mining hardware to your chosen Bitcoin mining pool. The steps for this particular part of the process will be specific to each mining pool. Most will provide a simple easy step process for ASIC miner configuration.
- Check mining pool rewards. Checking rewards can be completed via multiple methods including both on-chain and within your wallet. Rewards and transactions can be viewed from the wallet connected to the Bitcoin mining pool. Alternatively, visit the Bitcoin Block Explorer, and use your wallet address and transaction details to find the pay-outs from the mining operator.
Finding A Bitcoin Mining Pool
Once bitcoin mining equipment has been acquired, the next step in the process is to find a suitable mining pool. Thanks to the adoption of Bitcoin mining there are now hundreds of Bitcoin mining pools to choose from. Unfortunately, not all are created equally, which means some homework will be required.
These are the most popular Bitcoin mining pools available on the market.
- SlushPool. Bringing first-mover advantage to the table, SlushPool was the first Bitcoin mining pool ever created. Although it no longer dominates the Bitcoin mining scene, it remains a popular choice. The interface discourages pool hopping and requires a 2% fee for access.
- AntPool. Established in 2014, AntPool is a mining pool operated by Bitmain technologies in China. It has grown to become one of the largest pools in the world. Rewards are distributed each day and fees can range from 0% to 4%.
- F2 Pool. F2 Pool was launched in 2013 and is one of the oldest mining pools for Bitcoin in the industry. The pool is operated from China but is accessible for users globally. Fees can reach 2.5% but the platform does support the mining of other cryptocurrencies.
- ECOS. Implementing a slightly different strategy to traditional mining platforms, ECOS offers users the ability to cloud mine Bitcoin remotely. Users can purchase an ASIC miner from ECOS which is then operated locally at their facility.
- ViaBTC. Initially headquartered in China, ViaBTC first opened in 2016. Best-known for its high uptime, Bitcoin miners can access daily pay-outs through both PPS and PPLNS payment options. Fees range from 2% to 4% but, like F2 Pool, cryptocurrencies other than Bitcoin are also supported.
- CoinFly. CoinFly is a Bitcoin mining pool aggregator that offers a cryptocurrency operating system (COS). Instead of having a native mining pool, the platform provides connections to other providers. The platform does not charge a fee for its service but payout terms will be dependent on the pool chosen.
- NiceHash. As one of the most comprehensive platforms, NiceHash incorporates mining pools, a hashrate marketplace and a cryptocurrency exchange. Users can access NiceHash’s native mining pool or, like CoinFly, users can connect to third-party operators.
- Poolin. Formed by 3 former Bitmain employees, Poolin is now one of the top 5 Bitcoin mining pools in the world. Although fees are 2.5%, miners can claim part of all transaction fees alongside block rewards.BTC.com. After developing a wallet and block explorer, BTC.com decided to launch a Bitcoin mining pool in 2016. Mining fees are charged at 1.5% with transaction fees from the Bitcoin network also included within rewards.
How To Choose A Bitcoin Mining Pool
When searching and comparing the best Bitcoin mining pools, there are four key factors to consider before joining. These include the reputation of the company, the mining pool fees, the pay-out scheme and where the mining equipment is located.
- Reputation. There have been many instances when Bitcoin mining pools have been exploited; either by other users or by the pool operators. There are also certain pool operators that wish to slow down transaction times on the blockchain. Therefore, when it comes to choosing Bitcoin mining pools, reputation is a major factor. Make sure any mining pool is well respected within the community by checking social media channels. If a pool offers something too good to be true - it likely is.
- Fees. All mining pool operators will charge a maintenance fee for the services provided. This is often defined as a percentage of the BTC rewarded. Although lower fees may be attractive, lower fees are often offered to attract new members if the pool is small. Higher fees may not necessarily be a bad thing.
- Pay-out scheme. Like fees, a significant differentiator between mining pools is how rewards are distributed - otherwise referred to as the payout scheme. There are 2 main payout schemes employed; (1) pay-per-share and (2) pay-per-last-N-shares. For more information on these schemes visit our Bitcoin mining pool guide.
- Location. Nearly all Bitcoin mining pools can be accessed from anywhere in the world. However, not all geographic locations are politically stable. Several countries have tried to ban all Bitcoin-related activities in the past. Consider if a chosen Bitcoin mining pool needs to be located within countries that are legal to own and mine Bitcoin.
What Equipment Do You Require?
The process of mining Bitcoin requires specific hardware. Although Bitcoin mining could be originally completed using central processing units (CPUs) and graphic processing units (GPUs), the minimum hardware now required is known as an ASIC (Application Specific Interface Circuit) miner. ASIC miners are hardware dedicated to solving the Bitcoin mining algorithm. They perform no other function, which allows for extreme efficiency. Without one, a user's computing power will unlikely be high enough to warrant joining a mining pool.
Related: How to build an ASIC mining rig.
Although resources in a Bitcoin mining group are pooled, a user's rewards are still proportional to the amount of computing power that can be provided. The more computing power that a user can offer to a mining pool, the more rewards the user will receive. The cost of electricity also needs to be factored into reward calculations. The lower the cost of electricity, the higher rewards will be.
Dedicated ASIC miners can range in value from $1,500 to $25,000. The higher the price, the higher the hash power (TH/s) that it will produce. For a list of dedicated ASIC miners check out f2pool’s Bitcoin miners page to compare different units.
To connect the mining rig to the Bitcoin blockchain network, specialized software is also required. The dedicated software can also be used to monitor the status and performance of the miners. Aspects such as power consumption, fan speed, overclocking for GPU devices, and Bitcoin earnings can be monitored using the software. For a list of the best-rated Bitcoin mining software, read our comparison article next.
BTC Mining Rig Energy Consumption
When choosing a mining rig, it is important to consider mining efficiency. Mining efficiency is defined by the power consumption per hashrate produced (W/T). The lower the power consumption, the higher the mining efficiency.
Before investing in Bitcoin mining equipment, use a Bitcoin mining calculator to determine what returns could be expected from specific hash power outputs. Most calculators require the TH/s output of a chosen ASIC miner, the cost of electricity, and the mining pool maintenance fees. The outcome will provide an estimate for how long a mining rig will need to be operational before it starts generating pure profit.
Bitcoin mining pools are the only feasible option for individual miners to stand a chance of earning BTC rewards from the Bitcoin blockchain. By combining hashrate resources, mining pools collectively benefit everyone that participates. It also means that the process of Bitcoin mining remains more decentralized.
Rewards will depend upon the efficiency of mining equipment, electricity costs and maintenance fees attributed to individual pools. The more computing power that can be contributed, the higher the rewards will be.
When deciding which mining pool to join, remember to focus on reputation, pay-out schemes and geographic location. If the process of Bitcoin mining is not for you, remember that purchasing BTC directly from a cryptocurrency exchange is always another option available to cryptocurrency investors.