- How to choose mining equipment
- Evaluating the transparency
- Analyzing the payout scheme
- Assessing the stability
- Reviewing the fees
- Evaluating the total size and power
- Choosing your pool
If you decide to try mining crypto, you can take one of two routes: you can either build your own mining farm or join a mining pool. The first option is quite expensive since miners have extremely high computational power nowadays, and you will need very powerful equipment to compete with them. The second option is more affordable which allows investors to earn money in proportion to the share of work.
However, even after deciding to join a mining pool, you will need to choose the right platform. This can be difficult because you need to analyze several important factors.
Various equipment can be used to mine cryptocurrency. Most mining apps use either a central processing unit (CPU) or a graphics processing unit (GPU). However, nowadays it takes more time and energy to mine coins than several years ago. Because of that CPU- and GPU-based mining is not as efficient and profitable as before.
The best thing you can do is use an application-specific integrated circuit (ASIC) — a special device that has been created for mining crypto.
Another option is to run multiple GPUs in one PC, but the computational power of such a complicated rig will still be inferior to that of an ASIC.
You can purchase an ASIC directly from its manufacturer or an online store. You should always take into account the hash rate of the ASIC, or, more simply, the speed of mining. Higher hash rates allow users to mine faster. Another factor to consider is the ASIC’s energy consumption.
For example, Goldshell KD5 has a high hash rate of 18 terahashes per second (Th/s). However, it costs $38,000, and its power consumption amounts to $200 a month.
Goldshell KD2 is an older model with a lower hash rate of 6 Th/s. It costs around $27,000 and consumes only $71 worth of electricity a month. It will cost you less, but it can hardly keep up with more efficient mining equipment.
You should take into account that there is high demand for such equipment and in most cases, you will need to pre-order an ASIC.
Before buying an ASIC, make sure to check out the installation requirements, since they can be very specific. For example, you might need to maintain the required temperature and humidity, provide cooling equipment, and keep the room clean. All these factors contribute to the increasing costs of operating your own mining farm. It is also important to have the necessary Internet connection speed to the server.
The operator must ensure that the mining pool is transparent and trustworthy. To analyze the operator’s transparency, check whether the pool’s specified hash rate is correct. Also, pay attention to the payout scheme. Some operators implement payment schemes with lower earnings.
A mining pool that does not ensure transparency by providing real-time data might not be your best option.
If you use cheaper mining equipment, you should opt for mining pools with lower payout thresholds because lower computational power means lower profits.
To distribute rewards, most mining pools use such payout schemes as pay-per-share (PPS) and pay-per-last-n-shares (PPLNS). PPS offers a fixed reward for each share of work. Usually, the user is paid instantly after submitting the share.
PPLNS is a weighted payment scheme — the pool gets a coin when a new block is found. Then the number of shares contributed by you is divided by the pool’s total number of shares and multiplied by the reward for successfully solving a new block.
PPS and PPLNS are the most common payment methods. There are several others, including FPPS that stands for full pay-per-share and includes a transaction fee reward, and PPLNG that stands for pay-per-last-n-groups.
The pool’s stability is assessed by the risks of downtime which might cause losses and decrease profits. When choosing a mining pool, you should seek answers to the following questions:
- Does the pool use an open connection or ensure connection security, for example by using a VPN?
- Is the mining pool vulnerable to DDoS attacks due to pooling activity?
- Has it experienced and withstood DDoS attacks?
- Is there a history of long downtimes?
To find information about the pool’s stability, check out the support page and look for tips, comments, and announcements.
Although other sources can sometimes provide information about the downtimes, these are not always reliable. The crypto industry is still developing and not all sources can be trusted.
Most mining pools charge pool fees, while others offer fee-free options. For instance, SlushPool — the world’s oldest mining pool — charges a 2% reward fee and a payout fee of 0.0001 Bitcoin for transactions lower than 0.01 Bitcoin.
P2Pool is another old mining pool still in operation. It does not charge any fees but offers lower hashing because it is a decentralized mining pool without a central server.
How many coins a mining pool can mine over a certain period depends on the computing power. The more miners combine their hashing power, the faster a coin can be mined. The pool size is an important factor determining the computing power.
However, it is not the only factor. A pool of several miners with high-end ASIC hardware can perform better than a larger pool of miners with cheaper and slower equipment. At the end of the day, it comes down to the pool’s total hash rate.
Larger pools usually have higher computing power and, therefore, better chances of generating blocks. It usually takes small pools more time to create a block. The size of a pool is also one of the indicators of its reliability. If a pool has many active miners, this might show that this pool has gained their trust.
After analyzing several mining pools based on these criteria, you can choose a pool according to your equipment and finances. You can join a pool having only a PC with a mining GPU, but this is not the most profitable option. Of course, if you are not ready to invest more, you can settle for small rewards and try to use existing equipment for GPU mining.
If you are looking for higher profits though, you will need to invest more. You should find appropriate premises, buy an expensive high-end ASIC and ensure a stable power supply and Internet connection. After that, you should choose the best mining pool. Do not count upon getting rich quickly. It takes at least six months for mining equipment to pay off. In most cases, it will take over 12 or even 18 months.
Finally, we would advise you to choose a mining pool that allows users to mine altcoins as well as Bitcoin. In this case, you will always be able to switch to a more profitable option and make more money.