With the continuous mining of Bitcoin and the increase in miners’ hashrate, it’s become harder and almost impossible for an individual to get a block’s bookkeeping right alone. So more people choose to mine in teams — that is, mine in a pool. When newcomers first encounter a pool, they’re often at a loss about the pool’s settlement method. PPS/PPLNS/P2P/SOLO — which to choose? Which suits them? Let me analyze the settlement methods I know and understand.
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Note: the following views are my personal opinions, for reference only; please decide for yourself. If reprinted, please credit the author and link to this article.
Bitcoin Reward
The Bitcoin system rules: each block mined rewards 50 BTC, halved every 210,000 blocks. At the time of this blog, the reward is 25 BTC. The time to produce a block is about ten minutes; if the whole-network hashrate increases, the network adjusts the difficulty to always maintain one block every ten minutes.
What Is a Mining Pool
Because there’s only one block every ten minutes, everyone is competing, like buying a lottery ticket. To improve the winning rate, everyone buys lottery tickets together. If someone wins, everyone shares. Some buy more tickets and get more. The bought tickets are the hashrate, which produces a contribution value, distributed according to the contribution value.
PPS Settlement
PPS (Pay Per Share): the formula is: earnings = reward BTC × workload / current network difficulty. It means selling your hashrate to the pool; whether or not the pool finds a block, it pays you BTC, and the amount is calculated based on your hashrate and the current network difficulty. So it’s a guaranteed income — very stable, and the most chosen mode. Because PPS has the pool bear the risk, it charges a certain fee. Because if no block is found, the pool still has to pay you wages.
PPLNS Settlement
PPLNS (Pay Per Last N Shares): it means “pay earnings based on the past N shares”. This means all miners, once a block is found, will distribute the coins in the block according to each person’s own share contribution ratio. (share means contribution). This settlement is closely tied to finding blocks. If no block is found all day, then today’s wages are zero. In PPLNS mode, luck is very important. If the pool finds many blocks in a day, everyone’s dividend is also large; if the pool finds no block all day, then everyone gets no earnings. Also, because PPLNS has a certain lag inertia, your mining earnings have a certain delay. For example, if you join a new PPLNS pool, you’ll find the earnings in the first few hours are lower, because others have already contributed many shares in this pool, and you’re new with little contribution, so your dividend earnings are low. Over time, what should be settled is settled, and when everyone starts a new round of computation, you return to the same level as others. Likewise, if you leave the PPLNS pool and stop mining, your contributed shares are still there, and for a period afterward you’ll still get dividend earnings until your shares are settled.
SOLO Mode
SOLO mining means mining alone by yourself, computing the block yourself, colliding with the HASH value. If you collide, the entire block reward belongs to you alone. Likewise, if you don’t find a block in a day, you get nothing all day. SOLO mode is currently chosen by users with relatively large hashrate, because they have to compete with others; if the hashrate is too low, it’s hard to grab.
P2P Mode
The P2P mining mode is a mining mode launched by inheriting the p2pool open-source project. It provides miners with a peer-to-peer mining method, preventing hashrate from concentrating in a centralized pool and launching a 51% attack on the Bitcoin network. Currently the p2p network situation isn’t good, so it’s basically not used anymore.
Choosing a Settlement Method
If you’re an ordinary miner who just wants to mine for money, it’s recommended to use the PPS settlement method, so earnings are very stable. If you’re a small gambler who likes the feeling of winning, consider PPLNS mode, with less fee, but how much you earn depends on luck. If you’re a large-hashrate user confident in your luck, you can choose to SOLO yourself — if you mine it’s all yours, if not you get nothing. Suitable for professional miners in large-hashrate mining farms.
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