Mining Payouts/Plans
Mining Pool - “I always relate this term to the game called ‘tug of war’”. Let’s say Mr.X and Mr.Y are very strong guys each representing either side (A&B); while rest of the members on either of the sides are of equal strength. The game would be a tie supposedly. Now, let’s have both both X and Y on side A. With their powerful presence on side A, side B will obviously lose.
Thus, mining pool is a group of miners who work as a team (their hash powers are being added to form a ‘strong hash power’). Like asserted earlier, higher the power, higher the chance to find the block. On the contrary, let’s talk about a single miner “solo miner” who is not joining any ‘pool’. He is a loner trying to compete against the group of miners ‘pool’. Will the loner win the game? Thus, it’s said that for solo miner it’s 1 in 26.9 million chances to mine the block.
“Imagine! You bought a mobile and need to choose between the prepaid and postpaid plan ! Ooouch. You cannot blindly choose any of them before studying the pros and cons”.
Similarly, while starting to mint BTC but do not know which plan to choose? I have the acquaintance before you.
There are predominantly 4 plans as follows:
Pay-Per-Share (PPS) - One of the popular methods of payment. The worth of each share for the participating miners are calculated based on the probability of the number of shares needed for the pool to find a block. Let’s’ say a pool needs 100 valid share to find one block (and the pool found the block). Then each share is worth 0.0625 BTC as the pool is rewarded 6.25 BTC for find a block (Remember? For find a block, the reward is 6.25 BTC) Note. This reward would change after the next halving in 2024. Thus, with PPS, you get paid for each valid share contributed to the block, regardless of the network difficulties faced. To sum up, PPS payment method is what most of the people are looking at as it’s a stable and a reliable payment method.
Full Pay-Per Share (FPPS) - Is a variant of PPS, which guarantees miners a steady income. Works similar to PPS but offers a more comprehensive payment scheme. With FPPS, both transaction fee reward and the block reward is being distributed amongst the miners. When a block is found, the pools splits the reward plus the transaction fees among the miners. *The only difference is the transaction fee reward included here*. Since the transaction fee is included, miners receive a consistent payment.
Pay-Per-Last N Shares (PPLS) - a system of payment to reward on the number of valid shares contributed within a specific time window i.e., the pool goes ‘back in time’ to check for the valid shares contributed before the winning block. This window is known as the “PPLNS window”. Thus, the miners will be paid if the block has been found in the given time window only and not the otherwise. I would say this as the method that goes hand in hand with “LUCK”. This payment is particularly useful for miners who have a steady connection and do not hop from pool to pool. In addition, if a miner disconnects from the pool (such as internet disconnection), before the block is found, they may lose all the share they did contribute.
Pay Per Share + (PPS+) - is a blend of PPS and PPLNS. The block reward will be based on PPS model; while the transaction fee reward is calculated based on the PPLNS mode. This means the miner can earn additional income by receiving a portion of the transaction fee (which was not possible in the traditional PPS model).
Note: PPS+ ensure the benefits of both the models (as explained above) and increase their overall profits. This is useful for small-scale miners looking for a stable income stream. In addition, PPS+ model significantly reduces the risk of orphaned blocks, which can negatively impact a miners’ earnings. With PPS+ even when a block is orphaned, the miner still receives their share of the transaction fee.
Key Take Away - FPPS can be opted with risk as it depends on the luck if you are to pay the ‘slightly higher fee’ to the network operator (pool operator). On the other hand, PPLNS has not risk but have very very low fees to the users/miners. However, a thorough analysis of the pros and cons could be vetted before making an informed decision.
Now what is orphaned blocks? Will answer these doubts in the succeeding topics.
Thus, mining pool is a group of miners who work as a team (their hash powers are being added to form a ‘strong hash power’). Like asserted earlier, higher the power, higher the chance to find the block. On the contrary, let’s talk about a single miner “solo miner” who is not joining any ‘pool’. He is a loner trying to compete against the group of miners ‘pool’. Will the loner win the game? Thus, it’s said that for solo miner it’s 1 in 26.9 million chances to mine the block.
“Imagine! You bought a mobile and need to choose between the prepaid and postpaid plan ! Ooouch. You cannot blindly choose any of them before studying the pros and cons”.
Similarly, while starting to mint BTC but do not know which plan to choose? I have the acquaintance before you.
There are predominantly 4 plans as follows:
Pay-Per-Share (PPS) - One of the popular methods of payment. The worth of each share for the participating miners are calculated based on the probability of the number of shares needed for the pool to find a block. Let’s’ say a pool needs 100 valid share to find one block (and the pool found the block). Then each share is worth 0.0625 BTC as the pool is rewarded 6.25 BTC for find a block (Remember? For find a block, the reward is 6.25 BTC) Note. This reward would change after the next halving in 2024. Thus, with PPS, you get paid for each valid share contributed to the block, regardless of the network difficulties faced. To sum up, PPS payment method is what most of the people are looking at as it’s a stable and a reliable payment method.
Full Pay-Per Share (FPPS) - Is a variant of PPS, which guarantees miners a steady income. Works similar to PPS but offers a more comprehensive payment scheme. With FPPS, both transaction fee reward and the block reward is being distributed amongst the miners. When a block is found, the pools splits the reward plus the transaction fees among the miners. *The only difference is the transaction fee reward included here*. Since the transaction fee is included, miners receive a consistent payment.
Pay-Per-Last N Shares (PPLS) - a system of payment to reward on the number of valid shares contributed within a specific time window i.e., the pool goes ‘back in time’ to check for the valid shares contributed before the winning block. This window is known as the “PPLNS window”. Thus, the miners will be paid if the block has been found in the given time window only and not the otherwise. I would say this as the method that goes hand in hand with “LUCK”. This payment is particularly useful for miners who have a steady connection and do not hop from pool to pool. In addition, if a miner disconnects from the pool (such as internet disconnection), before the block is found, they may lose all the share they did contribute.
Pay Per Share + (PPS+) - is a blend of PPS and PPLNS. The block reward will be based on PPS model; while the transaction fee reward is calculated based on the PPLNS mode. This means the miner can earn additional income by receiving a portion of the transaction fee (which was not possible in the traditional PPS model).
Note: PPS+ ensure the benefits of both the models (as explained above) and increase their overall profits. This is useful for small-scale miners looking for a stable income stream. In addition, PPS+ model significantly reduces the risk of orphaned blocks, which can negatively impact a miners’ earnings. With PPS+ even when a block is orphaned, the miner still receives their share of the transaction fee.
Key Take Away - FPPS can be opted with risk as it depends on the luck if you are to pay the ‘slightly higher fee’ to the network operator (pool operator). On the other hand, PPLNS has not risk but have very very low fees to the users/miners. However, a thorough analysis of the pros and cons could be vetted before making an informed decision.
Now what is orphaned blocks? Will answer these doubts in the succeeding topics.
Will review your comment and get back!