Energy-carrying science-mining pool operation part 2

In "Energy Science Popularization - The Operation of Mining Pools Part 1", we introduced the mining process of mining pools and the mechanism of centralized mining. Now we will continue to introduce the functions of mining pools and how to distribute rewards.

Functions of mining pools

The mining pool is essentially a coordinator for the pool members. These functions include managing the value of the pool members, finding rewards through the efforts of available processing power, recording the work performed by each pool member, and distributing a share of the rewards to each pool member in proportion to the work distribution after appropriate verification.

The work of each pool member can be assigned in two ways. The traditional method involves assigning a member a unit of work, which consists of a specific range of random numbers, which are the numbers that blockchain miners are calculating. Once a pool member has completed work within the specified range, they will make a request to be assigned a new unit of work.

The second mining method allows pool members to freely choose and select the work they like without any allocation from the pool. This method ensures that no two members are in the same range, just like no two gold diggers are exploring the same piece of land.

How mining pools distribute rewards

The rewards for successfully identifying a mining pool are then shared according to the pool share mechanism. A share describes the contribution of a particular member computer to the mining pool.

There are two kinds of shares - accepted and rejected.

The accepted shares indicate that the work done by the pool members has been rewarded for contributing significantly to the discovery of new cryptocurrencies.

Rejected shares represent work that did not contribute to blockchain discovery and are therefore not paid for. Even if a member's computer successfully performed the work, but submitted it late for that particular block, it also constitutes rejected work.

Ideally, pool members want all of their shares to be accepted. However, rejected shares are inevitable because it is impossible for all computations on members' computers to be useful in coin discovery and always submitted on time.

Pool members will receive rewards based on the shares they accept that contribute to the discovery of new token blocks. Shares have no real value, it is just an accounting method to keep the reward distribution fair. Depending on the shares accepted, members can receive rewards using different methods as follows:

Pay Per Share (PPS): Allows instant payouts based only on the accepted shares provided by pool members, where pool members can immediately withdraw their income from the pool’s existing balance.

Proportional (PROP): At the end of a mining round, rewards are provided that are proportional to the member's share relative to the total shares in the pool.

Shared Maximum Payment Per Share (SMPPS): A method similar to PPS, but limits the payout to the maximum the shared pool has earned.

Equalized Shared Maximum Payment Per Share (ESMPPS): A method similar to SMPPS, but with payments distributed equally among all miners in a Bitcoin mining pool.

Other variants include the Dual Geometric Method (DGM), Recently Shared Maximum Payment Per Share (RSMPPS), Compensable Maximum Payment per Share with Recent Returns (CPPSRB), and Bitcoin Merged Mining (BPM).

Before deciding to join a particular mining pool, miners should pay attention to how each pool shares its payments among members and what fees, if any, it charges. Typically, a mining pool may charge a pool fee of 1% to 3%.

As mining becomes more popular with the support of high-speed equipment compatible with home computers, the chances of actually making a profit from a single mining operation are decreasing. Most people choose to join a mining pool, giving them a high probability limited profit instead of a low probability high profit.

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【Energy Carrier Introduction】

Zionodes was founded in 2020. The core team entered the professional field of Bitcoin mining in 2016. It has now become the world's leading Bitcoin mining machine trading platform, dedicated to providing miners with a one-stop Bitcoin mining service trading platform such as mining machine purchase and mining machine hosting. There are no hidden fees, no complicated contracts, and all costs are completely transparent.

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