Why Bitcoin Mining Pools Are Ideal for Retail Investors
In the early days of crypto, bitcoin mining meant that you could easily stack hundreds of BTC all by using your favorite desktop. For early adopters of the coin, this was the best– if not only– way to get a hold of the now-famous crypto. Today, there are a number of ways that retail investors can get in on the crypto craze– from newbie-friendly crypto trading platforms like Bitvavo.com, or even Bitcoin ATMs.
But with the price of the coin skyrocketing, it might seem a little unrealistic for most people to just pop in and buy a few BTC (as purchasing just one bitcoin will currently set you back about $50,000). Because of this newfound popularity, the coin has also become next to impossible to mine – as energy and hardware costs associated with the practice are often just as expensive as buying Bitcoin itself. So how do you continue to stack coins without pouring your life savings into the market, or spending all day glued to your day-trading platform of choice? Well, thanks to shared computing power and some tech-savvy pool creators, mining is back on the table for retail investors and at-home enthusiasts.
What is a Mining Pool?
In order to understand how a mining pool can benefit anyone who’s interested in crypto, you’ll need to first know a thing or two about mining itself. Crypto mining is a process that is used by certain cryptocurrencies (like bitcoin) as a way to validate their transactions and add them to the blockchain. Mining is an integral part of a “proof of work” validation system that is used by many of the major cryptocurrencies.
In order for the bitcoin network to confirm that a transaction is valid, and add it to the network’s public ledger (the blockchain), a mathematical “code” that is unique to each transaction must be solved. These codes are solved by using computers to continually input possible solutions and all the computers (nodes) that are connected to the bitcoin network compete to solve these codes first. The node that solves it first is rewarded in shiny new bitcoin. This not only gives miners an incentive to continue validating but also introduces new bitcoin into the market.
In order to keep the flow of bitcoin regular, the mathematical problems become more difficult to solve the more nodes there are connected to the network. While that’s great for the value of bitcoin, it makes it almost impossible to mine bitcoin from a home computer, as the computing power necessary is far beyond that of a home PC. So large groups of miners came together and pooled their computing power, which means that each pool has a better chance at solving the problem and earning the reward. Rewards are then distributed amongst the members of that pool based on how much computing power anyone person has provided.
This means that even as an owner of a standard computer, you now have the power to mine bitcoin. Which is effectively the power to make bitcoin by offering up your spare processing power to create an online supercomputer. This type of shared computer power has been used in many ways, from helping researchers to better understand how proteins work, to powering the IBM World Community Grid. Now you can not only donate to science but also make a bit of bitcoin as well.
The Biggest Mines in the Market
AntPool: A Chinese mining pool, headquartered in Beijing accounts for nearly 11% of all hash power on the Bitcoin network. AntPool is a great choice for anyone who is new to bitcoin mining, as they have a super user-friendly interface and great payment system.
F2Pool: A Chinese pool wielding nearly 18% of the hash power of Bitcoin, making it the second-largest bitcoin mining pool on the network. They have multinational functionality on their site, low payment thresholds, as well as allows for mining multiple different coins and tokens.
Poolin: Mining around 13% of all blocks, Poolin is a worldwide accessible mining pool that is not only user-friendly but handles a good chunk of hash power. While the company is based in China, their website functions in multiple languages and allows users to get in on mining other types of crypto as well.
BTC.com: BTC.com isn’t just another public mining pool, but has gained massive popularity thanks to their in-house wallet and blockchain explorer. They even offer open source code and free management software, so miners can take a more focused control of their revenue.
Slush Pool: One of the originators of online, public mining pools, SlushPool has been around since 2010. Based in the Czech Republic, this pool offers users a fun and easy way to start mining their coins. Making it simple for anyone who is interested in bitcoin mining to jump on board and get started quickly.