Bitcoin 101: How to Earn BTC with Mining Pools
Mining Pools allow miners to come together and pool their computing power in order to increase the chance of mining a Bitcoin block.
Proof of Work mining dictates that the miner with the fastest hash rate has the best chance to mine a new block and receive not only the block rewards, which are brand new Bitcoins, but also the transaction fees paid by those who’s transactions were included in the block that they successfully mined.
The use of mining pools means that you combine your computing power with others. You contribute to a faster hash rate and increase your chances of mining a new block.
The rewards are then dispersed according to the amount of hash power contributed. If you want to mine Bitcoin using a GPU setup, just know that you most likely will not be contributing very much computing power to the mining pool compared to others who are using ASICs, and your payouts will reflect this.
^^^^^VIEW VIDEO HERE^^^^^
If you want to mine using a GPU setup, I’m going to suggest that you explore other coins that are GPU mining friendly. (Monero, Litecoin, Ethereum even...)
Monero for example has recently taken a stand against ASIC mining. In fact, they’ve decided to fork their code in order to keep ASICs from taking over and potentially causing their network to centralize.
If you want to join a mining pool, this means you’ll need to have a computer or mining rig dedicated to run and be connected to the internet 24/7.
You’ll also need to configure your mining rig or computer to direct its hash power towards the mining pool of your choice. Lastly, you’ll need an appropriate wallet to which your payments will be sent.
There are many guides available that help you to install the Bitcoin mining software, I’ll include links down below so you can check out a few.
There are some fundamental things about mining pools that are counterintuitive when it comes to Bitcoin and other cryptocurrencies as well.
Here’s the deal...
The thing about the Bitcoin network that has always been its strength is its decentralization and open source code. I know I’ve said it many times before, but it’s something that will always bear repeating.
Decentralization removes the risk of a single point of failure.
It keeps decision making where it should be, in the hands of the many who work to secure and maintain the network.
Once we start playing around with centralization it opens the door for power grabs and corruption.
Open source code and information is also vital because it allows anyone to learn about and understand the different systems that come into play with not only Bitcoin but other networks as well.
Granted, it’s rare to find a system that is completely decentralized, but things like mining pools don’t exactly help the cause.
So I want to encourage all of you to look into running your own fully validating nodes. These nodes are what monitor and ultimately keep the blockchain in check and maintain its integrity.
All of that being said, if you’re still interested in being a part of a mining pool, here are some things I urge you to be aware of:
- It’s a form of centralization
- Does the owner of the mining pool control how the entire pools hash rate affects the Bitcoin network? (AntPool)
- Is the payment system transparent?
- Do you receive portions of the transaction fees as well or just block rewards?
- Always be as aware as possible of the decisions made by the owner of the pool. If they are not transparent of their stance on issues, I would not recommend being a part of their pool.
Additional Reading/Sources:
GPU mining no longer an option for BTC
Mining Pool Hub:
Detailed comparison of popular BTC mining pools
Slush Pool
Ethereum Mining Pools
Monero Mining Pools
Bitcoin Mining software options
Thank you for the write up and video on Mining Heidi!
Your videos are always full of relevant and vital information.
As well, I really enjoy that each video is posted from a new location each time. I have watched many of your videos including ones from the early days and I noticed that from the very beginning you were playing with this concept! In your more recent videos I see that you have even started to play with some action shots! I like it!
Please keep doing what you do. Your adding a lot of value to the community here! 🙂
pos is not sustainable due to the amount of energy it needs.I believe eventually there will be a bitcoin fork that will incorporate PoS into the block chain. But again as a store of value may be the original bitcoin remain that way and there is no way an individual minor make sensible money by mining even after joining a pool
Hi Heidi!
Thanks a lot once again for this new video.
To be honest I am not such a big fan of mining pools since it is in my opinion even more risky and volatile then investing that money into the coins itself.
I really enjoy that each video is posted from a new location each time. I have watched many of your videos including ones from the early days and I noticed that from the very beginning you were playing with this concept!
Is it even worth minnig anymore? Thought it was cheaper just to buy the coins.
Thanks for the video @heiditravels. I wonder if this pool allocation option is just smoke and mirrors. I do the same as you, select the most profitable mining pool over the past 48 hrs, but I don't know if it changes anything. For all I know, we may think that we can choose which pool we want, but in reality, it doesn't make a bit of difference.
This article & video is really helpfull for people that have never hear of mining pools. Question is: are mining pools good or bad, because of the centralisation it creates ?
One of the best traveler on the steem blockchain, you get to move. From one country to the other and also adding great value to the ecosystem from your top notch videos @heiditravels , I have learnt great stuff from this post thanks for sharing such an insightful post about the bitcoin!