Dennis Y.Tue, May 11, 2021 6:26 PM
Minefield: Which Mining Method Is The Best?
In the first article of the crypto mining series, we explained the basics of mining. Now it's time to dig deeper and talk about how it's easier, safer, and more profitable to mine crypto: on mining pools and hubs, solo, or in the cloud. Let's see.
A comparison of three major ways to mine
1. Solo Mining — the miner acquires the equipment himself.
Pros: Miner gets all the money from mining
- Expenses for video cards
- Noise from the equipment
- Building and configuring of the farm on your own
- Power Costs
- Risk of equipment breakage
2. Mining through a pool — a miner buys equipment by himself and connects to a pool.
Pros: There are different profit-sharing schemes, but it could be more profitable than solo mining (see nuances in this text)
Cons: Exactly the same as for solo mining
3. Cloud Mining — the miner rents the computing power.
Pros: No complications related to buying, setting up, and maintaining the equipment.
- There are a lot of scam offers on the market, it is difficult to choose a decent project
- You do not monitor mining, so you can not be sure that you get all the money you are entitled to
- You pay rental fees Benefits are noticeably less
- Often contracts are supposed to be a long term
Let's talk about these three methods in more detail.
What are Mining Pools?
In recent years, with the growth of the network hash rate and the complexity of calculations, mining on one or even a few ASICs has also ceased to provide a significant income. Nowadays, blocks are often mined by large miners' associations aka mining pools. The creator of these pools can spend a lot of money to build the best ASIC mining pool.
The first crypto mining pool was created in 2010 by the founder and CEO of SatoshiLabs, Marek "Slush" Palatinus.
In the first part of this article series, you have seen where to monitor top pools. Also, BTC.com provides pretty good mining pool stats for different periods of time.
The most respected and effective pools at the moment of writing are F2Pool, BTC.com, Poolin, AntPool, Huobi.pool, Binance Pool.
Which Mining Pool is Best
The best Bitcoin mining pools (as well as pools for other coins) should have the following qualities:
- Minimal commission;
- 24/7 availability and the ability to monitor data;
- Integrity, reliability, and long existence;
- High computing power, resulting in a high probability of finding blocks on a regular basis;
- Low latency from mining equipment to the pool servers and minimum stale shares;
- Minimal payout threshold, so that you don't have to wait for a long time.
What is Solo Mining?
This term means mining coins using only your own or rented power without the help of other miners.
Before you start mining solo you need to calculate the probability of finding blocks with your power. In addition to the WhatToMine service already mentioned in the previous part of the review, you can use 2CryptoCalc.com, for example. Here is another global Bitcoin Mining Calculator.
In addition, it is very important to choose the right currency for solo mining. Considering the unproductiveness of solo mining for many popular coins, today it is best to look for new altcoins, which use the Proof-of-Work algorithm and whose hash rate is still low. But start only if you see prospects for its growth and ROI.
There are 2 factors that influence the profitability of solo mining:
- Network complexity
- The power of the equipment.
Mining is somewhat like a lottery. The probability of finding blocks is lower when you are mining solo. However, in the long run, solo mining makes the most profit compared to mining on a pool. But don't really consider solo mining until you have a lot of processing power (hash power).
What is cloud mining?
It is a generic term used for websites that charge a monthly fee in exchange for providing cloud mining services for you.
Unfortunately, a huge number of cloud mining companies today are either just scammers (Ponzi schemes) or operate on an inefficient (compared to buying and holding Bitcoin) business model.
Is cloud mining profitable and safe? Far from it. Is there a free cloud mining really worth your efforts? No. The crypto cloud mining companies consider their services as a way to make money.
So here is the best cloud mining advice. We appeal to you to be watchful, check your information, reputation and weigh the risks carefully.
Of course, no overview can be your ultimate recommendation of what is appropriate and what is not. The situation can fundamentally change at any moment. Therefore, the benefits, risks, and prospects for each particular mining case, can only be assessed by you.
The next review will focus on crypto mining hardware.